I blame Microsoft because it falls to the responsibility of Microsoft to help nurture their ailing development studios back to health.

But as Microsoft has shown, they are utterly incompetent as dev studio managers, and therefore couldn't be saved by MS. How could they?

The blind can't lead the blind

IIRC Nintendo and Rare had some problems, thus the main the reason MS bought the company, but don't quote me on this. There's been numerous interviews with ex-Rare employees saying they regret going to MS and I believe some of the members are working on Retro's studio. 

But to answer the question I do believe Rare would have step down a little in quality, but not as much as it has been with MS...

There really wasnt a mass exodus though.  There were several small exoduses that starting happening before microsoft took over and continued after.  My point is that rare was already on the course to loose most of its talent.  The glory days of rare happened when martin Hollis was the lead of software development, and he left long before the buyout.  

Rare was going to be sold no matter what because the owners were looking to cash out.  The potential buyers were the usual suspects of activision and EA, and honestly Rare probably would have done even worse under their care.  So, like i said, Rare was going down no matter what microsoft did.

If they were with Nintendo, I think they'd still be a very high quality studio. Almost every team working under Nintendo releases good quality games (Xenoblade, Punch-Out, Pilotwings, Excitebike/bots, Mario & Luigi, The Last Story, are all at least decent IMO). 

I would take a Perfect Dark or Conker on the Wii U anyday, Banjo-Kazooie would be great on the 3DS, Killer Instinct and GoldenEye on the Virtual Console please.

/This

Rare lost the bulk of it's talent. People seem to forget that. It's why Nintendo was so willing to part with them. They essentially got free money from a direct rival.

Viva Pinata 1 and 2 are great games, the Kinect Sports games are really fun and huge sellers, Nutz and Bolts was good, Banjo Kazooie 1 and 2 xbla were great with added improvements as was Perfect Dark xbla, Conker Live and Reloaded was a great remake imo.. While I agree they aren't as great as they were at one time, Rare isn't as horrible as people are making out. I'm also pretty sure that Killer Instinct next gen is on the way.

Rare's FPS division basically left to form Free Radical. Nintendo didn't see the point in holding on to Rare. Star Fox Adventures ended up being a decent action/adventure at worst, and quite beautiful at best. Poor management from Microsoft led to Grabbed By the Ghoulies and that awful Conker game. The lack of their usual FPS talent hampered Perfect Dark Zero's development, but at least Kameo is something of an underrated gem. Viva Pinata and Banjo-Kazooie are not bad games by any means, though they do not compare to the significance of Rare's N64 titles. Kinect Sports is probably a good thing for Rare, because at least it gives them a new vision, which is something they've been needing.

Kameo is one launch title that still looks great not to mention it's really fun

What if Sony has brought them XD

I think Microsoft should sell/lease out Rare's IPs. They obviously want nothing to do with them (Cancelled Kameo 2, and Perfect Dark Core[Or whatever it was called]). Let someone else try their hand.