I mean it would be insanely powerful, and I don't just mean specs wise. Imagine if the next Switch docked in the next Xbox? Or hell, what if the Switch Pro does? Could solve Nintendo's weird problem with having a console that's sort of in between gens and is just getting momentum when the next generation starts. They release a Switch Pro that interacts directly with a next gen console and people have an all new reason to buy a Switch while long time Switch owners continue to get games developed for the Switch and Nintendo doesn't have to release a new console and cut the Switch's life short. Brand wise it fixes Nintendo's kiddie image while bolstering Xbox's family friendly image. That said I don't see any cross branding happening, aka no "Xtendos" or "Nintendoboxes" at least in official branding, Nintendo Switch and Xbox would keep their separate brands, just happen to work together.
Since the Switch released I've been thinking how great for both companies a Xbox-dock for Switch would be. I still thought that this is a nutters thought, but with the recent news of the companies cozying up (cross-play, Xbox-Live available for Switch devs), maybe it isn't as crazy a thought as I made it out to be. And as you describe, it would be a great benefit for both companies and would shape the next gen in a completely different direction.