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We all know that Rare has a lot riding on Sea of Thieves, and that it would look terrible if Sea of Thieves failed to recoup development costs, but here's something optimistic but probably unrealistic I thought of; What if Nintendo reacquired Rare from Microsoft?

Yes we've discussed it before, and yes much of the old Rare people have left, but they're also bringing in new talent as well. :)

If Sea of Thieves failed, but Nintendo bought back Rare, what would happen? Would they make new Nintendo games, revive old ones, what?

I doubt Nintendo would buy back Rare, but sometimes I expect the unexpected.