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2 Consoles would work better IMO.

Smaller/cheaper/gimmick-focused console for families/kids/Japan.

Bigger/more expensive/pro focused console for more experienced players/the Western market.

Let them run the same Nintendo games (the handheld can run these games too), just scale them up and down. PC devs have been doing it for ages, so it's not impossible, especially if Nintendo is basically using the same hardware processors, just scaled up or down (new mobile processors can do this easily).

Time to change the game, the current rules aren't working for Nintendo at all so why should they continue to adhere to them?