For starters, over one third of 3DS owners are Japanes. I can guarantee you that most of those don't also own a PS3/PS4/360/XBO. So there's that.

The same EAD sub-divisions made Mario Kart and Nintendogs. Likewise for Animal Crossing and Wii Sports. However Animal Crossing, Splatoon and the Wii series aren't made by the same team, and the same for Nintendogs and Mario Kart. You don't have a single development team releasing multiple games a year. A single development team only releases one game every multiple years. The different development teams are overseen by the same senior staff though, but that's hardly the same as them actually being the same team.

Yes, in my scenario, the studios making Mario Kart, Smash Bros etc. would, in addition to the handheld entry, make a multiplat home console entry each gen. Like I've already explained, because it would most likely sell boatloads more than their hypothetical handheld project.

For a console maker it is a bigger priority to have a large and diverse libary than it is to make money on every indivual release. If nintendo went 3rd party a lot of their series would see success but any series that just doesn't catch on for whatever reason would be dropped

Quite frankly, because they've never showed an inclination towards wanting to make mature games.  They've been in the industry for 30 years; if Nintendo's internal studios wanted to make a mature title, they would have made a mature in-house title.  Hell, they've shown such a non-desire to make them that the few M-Rated IPs they do have are all 2nd patry developed (Geist, Fatal Frame and Eternal Darkness off the top of my head).  Kid-friendly games are all they seem to want to do internally outside of Metroid and Zelda and they keep on trying to push Metroid on Retro studios even though (from many rumors) they're sick of the franchise.  The rest of their non-E-Rated titles (specifically Fire Emblem and the Xeno games) are done by 1st party studios outside of their internal dev teams that basically do what they're unwilling to do themselves.  I actually want Nintendo to create more dev studios that focus on making the types of games that Nintendon't want to  but still maintain the type of Nintendo quality most of us are used to.

I don't see how 1/3 of 3DS sales coming from Japan somehow rules out the possibility of a large number of 3DS owners also owning PS/XB consoles.

Yes that is true but the same sub-division working on PS/XB games along with Nintendo handheld games could instead be multiple handheld games which would help sell Nintendo's hardware. We have no idea that Smash/Kart/etc. would sell boatloads better than new IP on their handheld, Splatoon is a good example of a new IP moving a lot of software and even helping out the hardware.

By having 100% of Nintendo's resources dedicated to a single platform, Nintendo can diversify which makes the hardware a more compelling purchase. If Nintendo were to stop making consoles but still make handhelds, they would do everything they can to make sure the handheld succeeds and would probably just release a Vita TV type device to satisfy people who prefer to play on consoles.

Releasing their games on PS/XB doesn't benefit their handheld at all while potentially hurting it.

There would still be some projects like that but the majority of 2nd party games and series would go away because they dont need to exist. Theres no way a 3rd party nintendo would pour money into something like bayonetta 3 after sold the way it did same goes for the last story, #fe, wonderful 101 ect, and thats not bringing up the fact that a it would be possible for a handfull of 1st party ips to simply not gain traction as 3rd party titles so that would be the end of those series as well. If nintendo could go 3rd party without it negatively impacting the games they publish in any way then i really wouldn't care but theres simply no way their line up would go through unscathed 

I'd be okay with it supposing they release the games on PS or Xbox ...

or they could just not do handhelds at all.

Yes I would mind. It would be the worst thing to happen to gaming since the collapse of 1983. We'd be stuck with the twins and that would be a disaster. Look at what they are doing now. Do you want that to be the future of gaming? The instant that Nintendo goes 3rd party, the downfall of gaming will be happening a few years later.

And the worst part is that Sony and MS won't care. They'll just go back to their TVs or photo cells or OSes and act like the collapse of gaming was no big deal. The real victims are the gamers. I can't believe that people are wishing for the downfall of the hobby they supposedly love.

No one is talking about going back in time and killing nintendo. If nintendo goes third party, their games will still be around and the gaming market will be just fine.

The problem is not all their games would be around. 

Being a hardware maker forces you to produce a wider variety of games than you would otherwise. 

If they become a third party, it'll just be the big IPs like Mario Kart, Mario, Pokemon, Animal Crossing, Zelda, that will get made over and over and over again, because as a third party they don't have any responsibility to build the overall platform, just to sell as many games as possible. 

Which is fine if you like those IP, but it would suck for those of us who like things like Kid Icarus, Star Fox, Xenoblade, Punch-Out!, F-Zero, as a lot of those types of games would get phased out. 

Look at Sega ... all they make is Sonic + Yakuza and a few other IP and nothing else. Compare that to what they used to make when they were a console maker. 

If they have to go third party I'd rather they just choose one of Microsoft or Sony to align with and become a partner with, rather than just becoming a generic third party publisher.