Well, the problem is that it could keep the Switch from gaining proper traction. If it was the go-to alternative for both home console and handheld more or less right away, it would have a much larger potential market. Then again; there's no guarantee that such a transition would be wholly favorable for Nintendo overall. But it makes me wonder about the whole merging libraries plan, as long as they keep the 3DS, they also keep dividing their developer efforts, and this leads to extended development cycles that plagued the 8th gen for them, and with the expectedly unimpressive 3rd party support and only being a home console extension for now, the Switch might suffer under this idea in 2017 and first half of 2018. If they want any hopes of attracting customers outside of the conventional loop, they need to hit the ground running, devices rarely, if ever, become trendy a year or more into the life cycle. On the other hand; I don't think the Switch will appeal to the mass market to any significant degree.
Long story short; it seems really poorly planned, which is worrying. They're still behaving like a company that doesn't understand the market and its various segments and demographics. We'll see how it pans out, but having the 3DS exist alongside the Switch defeats part of the purpose of having a hybrid console, at least for the handheld segment of the market.
PS: The 3DS is really on its last legs and has been nosediving yoy for some time, I don't know how you define a "decent year", but it could actually be a bad year for it and the payoff for killing it may be bigger than keeping it barely floating.
I'm not saying the 3DS isn't on its last legs, and yes, I think last year was decent considering how old it is. Though a lot of credit goes to Pokemon Go. Not only did Sun and Moon sell 14 million in only 3 months or so, but XY, ORAS, and even the VC OG games found new life throughout the year as the Go phenomenon became the big news in the second half of the year. Even the 3DS saw a jump, not a big jump, but a jump nonetheless.
And as for the 3DS existing defeating the purpose, I guess the Fire Emblem direct sorta signifies what they plan to do moving forward for now. They not only have a 3DS game coming this year, but also a new mainline title coming next year as well as Fire Emblem Warriors coming on both New 3DS and Switch.
And as for mass market, we'll just have to see as more things are coming within Nintendo's business. Mobile and merchandise are only part of their plans. Of course, the others I'm talking about (ie, films, theme parks, etc.), aren't there in the short-term (1-2 years) future, but can pay dividends later on once they become reality.