I feel that if Nintendo truly intends to cannibalize their handheld division for the sake of trying to bolster their home console division, Nintendo is going to crash and burn in the most ugly way possible. It's a decent idea on paper, but you have in all likelihood:
A) A very expensive handheld and a moderately expensive home console, similar enough in specs to run the same games, even if downported for the handheld meaning neither has a unique library
B) A lack of gamers purchasing both systems since a combined library makes owning both an irrelevant luxury
C) Many gamers simply not investing in the next generation of Nintendo handheld hardware, either because the handheld is too expensive, or it simply becomes inconvenient
No matter what, they only serve to lose customers, not actually gain basically anybody. This is why I have basically zero confidence in this idea people have of a combined platform. At that point, Nintendo may as well just announce that they're changing to a third party developer and switch to only making QoL hardware like Mario themed alarm clocks.
I think your explanation for the NX itself is closer to being on point than most guesses I've seen though. The way Nintendo announced it, they did not intend for the NX itself to replace any hardware. I even posted a slide from the presentation where they first announced it in a different thread where it clearly showed the NX being side by side but distinct from their current hardware line up, as well as other hardware out there (ie: tablets, smartphones, and computers). It makes more sense to see the NX itself as a unified development platform that helps to simplify game development than to see it is a hardware successor to any current generation hardware.
