What if Switch 1 just stream Switch 2 games?

I mean. With the release of a new game console, there is a dilemma: Crossgen or fully focus on the new console? 

- You want to either keep supporting the users of the old console with new content (because statistically, most will move to the new console only after the third year or later). Also, Switch 2 will likely to be expensive, many will not upgrade as early. Also, a game developer would want to have the biggest installed base as possible for your game.

-Also, you want to offer games that could only be possible in the next console, you offer value to buy a new console. If the new games are crossgen, you would question why have you upgraded.

However, you have limited staff for both. If you offer new content for old console you compromise the potential to fully support the new console.
So, a solution for this dilemma is to support content of the new console in the old by cloud streaming. Maybe just an app on switch 1, where you access and play all your switch 2 games. All in a single place and easy for any developer: just let the game run on switch 2, the infrastructure to stream is provided by Nintendo itself.

Imagine switch 2 having potential to run true next gen games (like GTAVI or alike). You want Nintendo to make games with this capability, not being held back by switch 1 capabilities.
You buy the switch 2 games, play by streaming on switch 1, and when you upgrade to switch 2 all the games are there for you to play locally.
People would still want to upgrade to switch 2, because cloud streaming is not the same experience. People who buy Switch 2 on the launch can already have. 

And would be great for publishers. They could offer the game to potentially 150+ million players already on the Switch 2 launch, and without compromising the game capability. 

Switch 1 is basically using Wii U tech which is basically a pro version of the ps3. No thanks. Completely leave that gen behind with new tech and games exclusively on the new gen.

Tbh, cloud streaming should be similar to Remote Play on PlayStation if Nintendo goes for it.
I can Remote Play my PS5 games on my PS4 if I wanted to, but there's no direct forward compatibility even with standard cloud streaming.
Nintendo should have some native cross-gen titles and some third-party games that run natively on Switch 2 should be cloud-based on Switch.

Switch 2 needs a tech boost, pretty big one. I want BC via cartridge slot on the switch 2. Personally I don't see the switch running something like GTA6 very well. Memory speed is going to be an issue. Which is fine. I want LM5, pikmin 5 and WWHD at 60 fps.

Cloud gaming again ? Welp, this has worked horribly for the Switch so far so I don't expect them to even pursue such a solution

Completely different tech.

CPU is 3 core PowerPC vs 4 core Arm.
GPU is AMD Radeon VLIW vs nVidia Geforce Maxwell.
Ram is 2GB DDR3 vs 4GB DDR4.
Tablet vs Joycons.

Casuals, and most normal gamers (not Digital Foundry nerds) wouldn't be able to tell much of a difference between Ps3, Wii U, and Switch versions of the same game. Marginal differences. The Switch 2, if it can run DLSS 2+, is going to absolutely annihilate the Switch 1, Wii U, and PS3, and I'm delighted about that.

Multiplatform ports tend to retain a degree of base-parity in what graphical effects and hardware feature sets that are leveraged... Regardless of platform.
I.E. There are multiplats on Xbox 360/Playstation 3 that ended up on Xbox One and Playstation 4; which outside of resolution/framerate bumps are identical.

Some of the more visually impressive Switch titles just wouldn't translate very well to the Playstation 3 as it has a far more modern feature set.
I.E. Tessellation, Shader Model 4/5/6 support, Vertex Shader 4/5, Geometry Shaders, VXGI, Partially Resident Textures and more.

And when leveraged right we can get some very impressive looking titles.

But you are right that most muggles wouldn't notice a difference between say... Mario Kart 8 or Breath of the Wild on WiiU compared to the Switch, because there isn't any outside of resolution.

Where is that dilemma?

Most Switch 1 gamers who don't want to switch to Switch 2 yet, won't suddenly stop buying games for their handheld.

There is a catalogue of over 10,000 Switch 1 games.
Even most people who only buy first party games probably won't have already bought half (or a third) of the over 200 Nintendo published Switch 1 titles.

Also streaming games without a proper WiFi connection is problematic.