I assumed that quality standards should be maintained, hence only three more games.

As for the combination of console and handheld output, for anyone who owns a Nintendo console and handheld right now, Nintendo's output of games won't feel greater. Only people who only own one or the other will notice a benefit; however, that has nothing to do with your idea.

Bugginess is a whole different thing from cutting out content on purpose to sell as DLC. Nintendo games would be buggier too if they were as complex as Bethesda open world RPGs. All of the other stuff you're talking about is just balance and gameplay issues that can easily be fixed, irrelevant to this conversation.

Majora's Mask is actually a really good example. That was something reusing assets from OoT and was really much easier to produce than an all new Zelda game. That could've easily been an expansion if the infrastructure were there.

On top of that Elder Scrolls games are some of the longest lived games out there due to the modding community. Take that and apply it to Nintendo and you could have some really great content and long lived games.

If you have four teams of 100 and are cutting team sizes like that, why not have five teams of 80 people that work on five new games?

Complexity has no ground here. Legend of Zelda is as complex to create as Skyrim is, and the difference is one releases with day 1 patches and the other doesn't. Fire Emblem is a perfect example of an RPG, mysteriously Nintendo releases that with next to no bugs. What I'm getting at, you're asking Nintendo drop it's standards (which are f'n high). To release DLC that makes the game seem broken. That's like  me buying a case of beer, without the beer in it and have the guy selling me the bottles individually. I would get plenty pissed. Nintendo has established franchises, they don't need to change conventions cause 7 people want expansions for a single Zelda game

Let's see. For argument's sake, Nintendo has 100 developers that are divided into four teams of 25 people. Without DLC, two development cycles will result in eight games of the expected quality standards.

With DLC, we first have four completed games from one development cycle. Now six people of each team will work on DLC for the released games, leaving 76 people to work on new games. 76/25=3, so three more games are made in the second development cycle, bringing the total to seven. That's one game less.

Do you understand? The number of game releases won't magically increase when smaller teams have to work on DLC. The opposite is the case. And since Nintendo has more than four development teams, the decrease in the number of released games will be greater than in the above example.

You clearly have no idea how game development works. You don't necessarally need a full working team the moment a project starts. It's only around the final stages of development, when you have art direction, game design and the whole project vision set in stone that game developers are need the most. That's why Captain Toad is being developed alongside the new Mario game. The next project won't be needing 100 devs working at the same time anytime soon. Meanwhile, the rest of the team is working on an easier to develop game, which could be DLC, as the OP is suggesting.