The way that things are now, it does look like this. But assuming they eventually add snes, N64, etc, the current service will be much better than the virtual console.

Agreed. I do not like game as a service.

It will not happen, but personally I would like Nintendo to do some kind of collection with its retro games like sega and other companies do. Take out something like Snes collection, N64 collection, gamecube collection, each one separately and in cartridge.

I was confused by that too, and with the whole service being called "Nintendo Switch Online"(So will it not carry on to the next console?), but I guess a simple re branding or multiple apps. 

I'm sure they have a reason though, whatever it may be. 

My theory on why Nintendo has abandoned the previous concept is that other than Mario and Zelda games the service probably wasn't that successful. So a lot of resources spent on nothing.

Agreed, that would be the best.

No, you don't need a lot of resource. Emulators already exist, the dumps exist, all you need is package them, maybe test it through once and then gain the money. It is the main reason everyone is releasing retro collections or single games. Look at Sega Ages. You can't tell me that is more profitable than NES games?

Again, assuming it does become flesh out with including more systems, I know I would prefer to pay $20 a year for all of the games then the range of $5-$20 per game

They also have to be classified by for example the ESRB which i heard is an expensive process.