I don't really see Nintendo going back any time soon, honestly

Off with your head!

Whether it would be Nintendo or another company to release it, I believe there's still a potential demand for a classic handheld device for pure "pick up and play" experiences.
The problem is there wouldn't be enough developers to potentially support it. A console like that would be too different from any other avaliable platform and developers are too risk adverse nowadays to publish a game they can't release on multiple systems.

A handheld only Switch Mini would fall into this categry.

While the switch is the closest thing to it in the market, it's not exactly what I would define a pure "pick up and play" system, that imo would be a game system that could boot up, start and finish a play session in the span of 15 minutes. The Switch, for good reasons since it's an hybrid device, is designed for more immersive experiences and longer play sessions.

Like i said, a portable only revision.

I'm not sure what do you mean by that, but I can't picture how a portable only revision would fit my description above without sacrificing some of the system's main features.

A smaller revision the size of PSP/Vita without detachable controls or TV play for $199.

Even if we consider techincally feasible to shrink down the console to a PSP size while maintaing a good battery life (which it isn't atm), there's no way you can cram 2 analog sticks, 2 triggers for each side plus other 10 physcal buttons in such a small space, the thing would be a hell to use and not very much portable anyways. It would offer an inferior experience on all fronts and it would sacrifice 2 of the system's main features.

Definitely the Switch is destined to take on this role when a smaller cheaper version becomes available.