Archaeologist here.
> In archaeology, there seems to be an assumption that people in the past only ever did things for two reasons: Utility and religion. If an object doesn't seem to have an obvious usefulness, it's assumed that the artifact is of religious nature.
> I wonder if archeologists actually do believe everything was either utilitarian or religious, or if that’s just the way it gets reported?
This is definitely now how archaeologists think. Archaeology is a subfield of anthropology. Our goal is to understand how people live through the lens of material culture, i.e. how people inhabit a world made out of stuff. Of course it is common to consider the pragmatic aspects regarding why weird things might have been created or the purposes that they might serve in people's lives, but chocking the unexplainable up to ritual or religion is just dumb and amateurish. No archaeologist I know actually does this. Archaeologists generally feel comfortable acknowledging that we can't explain certain things from our current standpoint, saying that it's ritual without a basis for that claim is just plain dumb and is never taken seriously. It is an extremely outdated trope.
> People have not changed much in the last few thousand years, and thins that we find interesting today must surely have been interesting in the past. In your example, why wouldn't a person 1000 years ago consider a replica "ancient thing" just as interesting as we do today?
Note in my definition of archaeology I don't focus on the past? That's intentional, since archaeologists very commonly examine contemporary material culture.
> Just imagine a future archaeologist looking at the modern work with the mindset of current archaeologists? What kind of religious symbolism would they ascribe to a picachu cosplay outfit?
As an archaeologist, my understanding is that pikachu products exist to make money for the people who sell pikachu products.
You need to understand that archaeologists are never working in the dark. We reason through an abductive process, like adding brushstrokes to a never-quite-complete painting (also similar to medical diagnosis). We'll never actually understand how people lived in the past, since it is impossible to verify any such claim. But we can come up with a reasonable understanding by slotting different streams of complementary evidence together.