99.99% of all games are not masterpieces, and the best game from most devs isn't their latest one. If a dev makes one of the best games ever made, as Retro did with Prime 1, the odds that they'll continue topping it over and over again forever are slim to none.

For my money Nintendo's best game ever was Mario Galaxy back in 2007 and Capcom's best ever was RE4 in 2005, but that doesn't mean everything they've done since was a fail.

Metroid Prime is not even a FPS anyway. It was first Person Metroid. Most of that game is solving puzzles and exploring. It's Super Metroid in FP. It's a FPA. The word masterpiece needs to be eradicated from gamer culture. They keep using that word not knowing what it means. I don't like MP2 much but MP3 was amazing. Many consider Tropical Freeze one of the best Platformers from Nintendo. Retro is as good as they ever been period. Comparing them with the downfall of Rare is a hyperbole.

To answer your first question...

But from what I remember Monolith had a hand in Splatoon 3, and that's a shooter, so unless they weren't involved in the actual shooting mechanics, I say they've taken a big step up from Dirge of Cerberus.

Quite agree with the XCX bit.

With games, we all have our own opinions, experiences, and places we come from; so I’ll speak of taste. As far as my tastes go, I enjoyed Xenosaga significantly more than Metroid Prime 1 and 2. But I’m a big fan of RPGs (particularly cinematic ones like Xenosaga, and also open ones). I’m not into dungeon crawlers or first-person shooters... and Metroid Prime was a cross between both... though I forget if it was as bad as its contemporary Zelda games, but one mechanic I despised from the PSX/N64/PS2/Wii era of gaming were the “find the keys” type mechanics, and I do recall Metroid Prime having quite a lot of that in it... it doesn’t bother reviewers, but I found it an uninteresting way to play games... I think the mechanics work a lot better in 2D, think the original Metroid and Zelda games, and even stuff like Gauntlet. But with 3D, instead of having everything visible to you, it becomes a slog through a cavernous environment; something that once took 5 seconds to 3 minutes now can take hours.

When I say cinematic, I include parallel-type experiences like Phoenix Wright, which have a lot of stories going on all the time; it trivializes what would otherwise be painful linearity. I’m a big fan of openness in mechanics, exploration, and such... and I don’t consider “looking for the switch/key” to be exploration, exploration is more stumbling on new places and seeing what it’s all about.... which gets me to Xenoblade...

Xenoblade blew me away with how open the game was (and this wasn’t even Xenoblade Chronicles X yet). While the story felt tugged along a rope forward, that only counted for like 5-8% of the experience (XCX would drop that down to almost nothing, the experience was driven almost purely by exploration), the rest was a lot of exploring all these new areas, finding new people, places. It was like Final Fantasy 12 done correctly. I played Metroid Prime 3 and DKR, but neither left much impression on me. Granted, I was a bit miffed at how Retro Studios was doing a Rare series... I understand it’s a bias, but I couldn’t help but shake the aura of illegitimacy the game exuded. Sometimes I can look past that if something stands out to me, but it didn’t.

In terms of influence, XCX had a profound influence on Breath of the Wild, which is my all-time favourite game made by Nintendo. It was also my favourite game of its generation (including PS3 and 3DS... note, I didn’t play Witcher 3 by this point...), and the remaster of XCX is my favourite non-Zelda/Witcher game of the Switch generation.

When it comes to eliteness, while I do love Monolithsoft... are they Nintendo's elite studio?

I'd say they're quite important at the least. They appeal to my demographic (RPG fans) and probably help keep me away from the competition... that's speaking for myself, I doubt most RPG fans would feel the same way.

The Xenoblade games are not directly important to Nintendo, more of a blip, really. However, Metroid Prime can be put in a similar boat... I think most people feel similar to me, "game is probably good for its fans, just not my type of game" - don't get me wrong, (as I've said) I really like the older Metroid games... again, a lot of that is nostalgia bias.

But the Xenoblade games and Monolithsoft are of key important for shaping some of Nintendo's key franchises, particularly the Legend of Zelda... which, XCX-style framework finally launched Zelda into stratospheric-level sales.

Monolithsoft also co-develop modern Zelda (since Skyward Sword and A Link Between Worlds), Animal Crossing (since New Leaf), Mario Kart, and Splatoon... all three of Nintendo's killer app franchises from last generation and another major franchise... and this generation, Mario Kart World is their main game on the Switch 2 so far.

Retro Studios? Not really sure their importance to Nintendo. They seem to be mostly used as a support team, and every decade or so they are made the head dev team on something, but when was the last time they did a game on their own? Have they ever done a game without requiring assistance?

But elite studio? For me, Nintendo's elite studio is EPD (formerly EAD).

The unfortunate truth is that both studios (Monolithsoft and Retro) are mainly support studios, not really elite. But at least Monolithsoft has its own franchise, creative drive, and well known veteran devs onboard who are even more famous in the English speaking world than those in the English language studio. So, if we're to say which studio is closer to elite status, I'd say Monolithsoft. Conceivably, they could have a game in 10 years that could break into the stratosphere, can the same be said of Retro?

Being an elite studio is not exclusive to studios who purely output a support studio can be elite because as you mentioned Monolith's hand helped elevate Zelda to new levels that hadn't been achieved before that's what elite entities do and it was a flash in the pan moment either, no Monolith means no BOTW then the launch of the Switch 1 is looking a lot different all of a sudden and the modern era of Zelda would be possibly in a far inferior position rather than now going blow for blow with games like The Witcher 3, RDR and GTA in pulling power. EPD outputs so well because of the support it's had from Intelligent Systems to Hal to Monolith your star striker scoring the goals doesn't stop the playmakers from being elite as well.