Fight as Iori Yagami:
Highlight the random character icon at the character selection screen, then hold Start and press Right, Left, Up, Right, Down, Left.

Fight as Real Kyo:
Highlight the random character icon at the character selection screen, then hold Start and press Left, Up, Right, Down, Left.

Select winning pose:
Press A, B, or C after the last attack, before the pose sequence begins. If your character is the losing fighter, press A, B, or C on controller two at this time.