I think you are correct in your analysis of Nintendos vision. I think you're wrong in dismissing that this vision can turn into something that has good market penetration. Execution is everything.Nintendo were willing to release the most powerful console they could at a very reasonable price so I wouldnt count Neo Geo which was super powerful but pricier. The SNES was more capable than the Genesis. The same went with the GC. For the price and performance it almost nailed it.
But Nintendo is not in touch with reality. The impression I get from Nintendo is that they are trying to materialize their own vision of a family friendly console, a console that is suitable for kids and grown ups that can play together, something like the equivalent of what board games used to be. The content for that should be neutral and happy. Then they release their product and expect it to attract and shape the market.
They dont check what works in the market currently and release based on that.
The parent part of me is totally on board with Nintendos vision. If they want to reach a mass market, I think this may be the only viable option - find an approach that resonates with families. Mind you, that doesn't say a whole lot about hardware performance, nor, ironically, about what games are available on the platform. It is more about presentation and marketing. If you market with Yoshis' Wooly World, Zelda and Pikmin you make a very different impression than if you do it with God of War, Battlefield and Forza.
Trying to be yet another PS4/XB1 just means too much competition for the same demographic. Nintendo can/should be there, but they need to extend beyond that group. Families is an obvious way to do that. The question is just how to achieve it.
Value, low price, family friendly marketing, width and depth of the games library - all factors that are important and need to be weighed agains each other.