The costs have very little to do with optimization and much to do with producing high quality assets (by hiring proper artists.) The higher quality the visuals, the higher quality the assets must be. Middleware is successful on PC's because PC gaming has a wide-range of system performance. 

It has much less to do with the hardware itself, and much more to do with the unrealistic demands of the consumers fueled by misguided publishers. There is nothing wrong with having powerful systems which push the boundaries. The problem is when gamers demand that every platform AND every game must cater to the top and cutting edge in visual fidelity at the expense of other aspects of the game and other boundaries. The Switch is good for the industry because it is a platform friendly to a variety of publishers and developers regardless of their ability to leverage capital or mitigate risk, just as dedicated handhelds and PC have that role. 

As for limitations to level design, AI, physics, this seems to be a marginal excuse. I haven't seen anything spectacular this generation in these areas, with possibly the exception of the way physics is handled. In the future this might be different, but all of these things are cpu-bound, and I don't see hardware manufacturers buffing up the CPU's in the systems (the PS4/XBO have low-end AMD Jaguar chips.) 

It would certainly be an innovation for Nintendo.

Nintendo also said that they would continue to support the GBA after the release of the DS since the two were supposedly going after different markets. That support lasted for all of three months or so. I wouldn't put much faith in Nintendo supporting the 3DS past this year. Doesn't make much business sense either; producing and actively supporting two gaming devices that can be played on the go is competing with yourself.

The Switch will likely take over the 3DS's role as the console of choice for middleware games, which is what puts it in a much better position than, say, the Wii U. The Wii U was stuck in a catch 22, in that very few quality games were made for it since very few people owned it, and very few people bought the machine because developers weren't creating games for it. Assuming the Switch is ultimately the 3DS's successor, it avoids that Catch 22 by making itself home to popular middleware titles that carried the 3DS like Pokemon, Monster Hunter, Animal Crossing, and Fire Emblem. At the very worst, the Switch occupies the niche of middleware titles with first party AAA Nintendo games and the occasional AAA third party title.

TL;DR, there is a dedicated place for middleware games, it'll just be the Switch, unless Nintendo has abandoned all common sense (which, given their approach to stocking items, might just be the case).

Well... Ummm... 

Ok you win!! 

Oh please, since when do you need cutting edge tech to make a 60fps fighting game? WiU had the best one of the gen at 1080p 60fps lol and is the weaker by a margin, GC had a bunch of impressive 60fps games already

Physics you say, new Zelda on WiiU has a very complex system of physics for the wind, it didnt need 4Gflops for that 

Then again the fps argument makes no sense, the fps depends of how demanding the rest of the game is, you can make everything run at 60fps with the right optimization and priorities.

And now you come with the HD rumble argument that is the worst of them all because it makes it look like you didnt undetrstand nothing, the HDRumble is not something that will waste half of your resources to make a game, is barely a detail, probably a very cool one but is not restraining videogame creativity in any way and is not gonna make you waste half of your budget on just that when making a game, is like complaining about the tactil surface on the Ps4 gamepad, so what? How is that affecting badly videogame development? Is just a cool detail.

As for the last sentence.... yeah all indies, exactly what I was saying before, the pretty graphics gets all the resources, the talent however is represented by guys doing 16bits games with barely no money and selling it for like 10 bucks, yeah, wonderful, totally balanced lol

Especially if you remind them of the fact they basically gave birth to playstation by rejecting Sony's aid in the hardware department. That didn't turn out very well to say in the least.

Again, I disagree. Your perception of games available on PS4/XB1 seems a little off. It's not like that.

I agree with the sentiment but no, we're not at the sweet spot of graphical capabilities yet.

Nintendos art design is clearly hampered by technical limitations of the Switch. Games like Mario Odyssey look jaggied af and Splatoon 2 is 720p docked. Their games will clearly benefit from being 1080p and have nice AA on them.

You can only do so much with cheap hardware. Nintendo could have given us good specs for the current price point, but no, it had to have some gimmick controls. Nearly 1/3 of the cost goes to JoyCons.

While I agree that the PS and Xbox brand are sort of stuck in the mud when it comes to changing it up, I don't agree that the Switch is providing the right alternative. Chasing tablet customers and, once again, shitting on online aspects in favor of local multiplayer, is not terribly clever, nor is it what the vast majority of the market wants. And Nintendo are continuing their tradition of grossly overpaid peripherals and accessories (and will likely continue to charge crazy for their games for a long time, full price after two years on the market is unacceptable today), and their recent insistence of charging a high premium for relatively poor performance hardware, this is most certainly not where the industry should be in that regard.
With publishers fleecing us on DLC and microtransactions, ridiculous pre-order bonuses and other tosh, we certainly don't want crazy prices on all accessories and never ending hiked prices on base software in addition.

I'm all for doing things differently, both in hardware and software (I remember playing Zenoclash and being blown away by the atmosphere and feel of the thing), but being different doesn't always mean good news. Not simply chasing better graphics is fine (I actually wrote about my disappointment over this in the UNITY thread), but the Switch is not the antidote.