Fair enough.

There's sadly a lot of games we probably missed out on because of the Rare sale.

Banjo-Threeie (GameCube)
Killer Instinct DS or Wii
Conker's Really Bad Fur Day (GameCube or Wii?)
Diddy Kong Racing 2 (Wii?)

Not to mention Retro maybe could've made something else by now because Rare probably would've been put on Donkey Kong Country for Wii and Wii U.

It's a shame. Yes, Rare was on a bit of a decline, but if Nintendo had bought them outright they would've quickly gotten them back into shape.

Retro Studios was a complete and utter disaster and under Nintendo's tutelege they pumped out Metroid Prime as their first game, which is probably one of the best games ever made.

Nintendo can help push a studio and get them back on track very quickly.

With huge Wii/DS sales so many of Rare's IP would've gotten a chance to shine too because Nintendo badly needed games, a Banjo-Kazooie game on Wii for holiday 2008 would've cleared 4-5 million copies easy and we'd still have that franchise around today. As is? It's basically dead. So don't tell me Rare was better off with Microsoft. There's no way. 

Maybe Nintendo can buy Playtonic Games and make up for lost time

Rare's 2nd best sold game was under Microsoft with Kinect Sport.

The problem is that Rare like many developers of the 90's had to adapt to new kind of gamers when 6th and 7th gen hit.

Nintendo has many IPs as well that they really f*cked their fans over with by not realeasing them of straight up butcher their identity. Who could guarantee they wouldn't do the same to Rare's?

Plus, how the hell they would get a new Conker out, when Seavor (Rare creator) didn't/doesn't get along with most Rare folks?

It's hard to tell. There were already faults appearing with Rare towards the end. Perhaps Nintendo saw the withdrawing talent and decided that things were too risky.

That being said, Nintendo acquired a huge share of Retro Studios around the same time. So the question is, would Nintendo have been better off investing that money in a major stakehold in Rare, or did Nintendo make the right decision going with Retro?

It's worth noting that Nintendo acquired Retro for the obscenely low price of $1 million, while Microsoft paid $375 million for Rare.

Also Perfect Dark ... while not without issues I think would still be an active franchise under Nintendo.

Nintendo made three Metroid Prime games and another Metroid: Other M game, I think we probably would've had 3 or 4 Perfect Dark games by now instead of just PD Zero and .... nothing.

Microsoft got Halo. Metroid got Federaion last month. I'm pretty sure most people would've prefered... nothing.