Is there/was there actually a substantial market for a powerful dedicated home console from Nintendo?

[Zippy6]

The main reason you'd want power is for multiplatform games. Exclusives will be specifically designed for the system so should be less of an issue (though not always).

There's no reason that Nintendo couldn't have become the go-to platform for third party if they created the right system, particularly for 7th gen, but they went a different way.

A powerful Nintendo system could have worked at one point, but they pivoted ever since the Wii and it's worked very well for them..

A low cost-of-entry to a system that is primarily suited to their first party catalogue and not chasing specs to run demanding AAA well is the right direction for them.