Well it would have gotten Final Fantasy 7 and it would be easier and cheaper to port games to, so I don't know.

Yes, without a doubt 64 would have been more successful. FFVII would have been on the system and that game changed the entire industry. The PS1, It was easier to program for, more familiar to devs who just came off the SNES, and due to how cheap CDs were and how much space you could hold, read speed wasn't really that important. All the advantages outweighed the negatives. Sure 64 games looked better than PS1 games...technically, PS1 games that used polygons just have a certain charm over the 64.

So in short, 64 would have been much more successful.

Using a universally adopted format that could hold much more code would have been an immense advantage, I hope no one would argue against that. Higher read speed is just about the only argument in favor of cartridge at that time, but this read speed is wasted when the amount of stored info is much smaller and the need for said speed more or less goes away, so there is that.
Choosing cartridges, and mini-DVD for the Gamecube were ridiculous decisions that gained them nothing but potentially lost them a great deal.

No, Sony worked with Nintendo on a CD add on for the SNES. It didnt work out, so Sony just made the Playstation instead.

Probably, could have gotten some more games, but it's hard to say

Not the whole truth. SEGA of America proposed to work with Sony for Saturn. SOA sent Sony proposed specs. SEGA of Japan hated the idea and wanted to go with their own design. Sony used the specs SOA wanted. The PS1 we got is thanks to SEGA.

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As to OP. Fact is this. Even if SEGA didn't go with Sony but made a machine that compared and easy to develop for didn't fuck up with Saturnday marketing and N64 used discs. PS1 NO DOUBT would have gone the way of 3D0 and CDi. PS1 much like PS4 was a success because the competition screwed up so badly.

Nintendo sometimes don't think really straight. While they push into one direction, they still throw stones in their path. They did so with the cartridges on N64 and did the same with these mini discs on the Gamecube.

I just don't get it why they are limiting themselfs all the damn time.

I seem to remember that Nintendo screwed Sony over due to the terms of the contract that Sont wanted and then went with Philips instead for their CD drive, all this without telling them and Sony only found out when Nintendo announced their new partnership with Philips on Stage. The Playstation was born out of no small amount of spite, it would seem. I bet that this is a decision that Nintendo have regretted more than once through the years and it ended up changing the industry forever.

Yeah, similar limitation to Xbox 360 using DVD's. The main issues with the medium relate to piracy. Piracy was what killed the Dreamcast in the end, PS2 did not have similar piracy in the early years that the Dreamcast had, because DVD-burners weren't a commodity yet, unlike CD-burners. The mini-DVD has certain size related limitations, but I'm not sure how many games actually needed more space.

The CD based devices weren't really popular at all on the market (Amiga CD32, Mega CD, 3DO, CDi), so it made perfect sense not to include a CD drive. But not only that, after Nintendo's partnership with Sony and Philips had crashed and burned earlier, I don't know if Nintendo had the time to look for a new partner to develope a CD drive (moreso if N64 was developed the high-speed cart port in mind). The only problem with the cartridge in the end was it's high price. 

This was Nintendo and Sony planning to develope a console called Play Station together, that would play SNES carts and CD games. However, the contract signed granted Sony 25% of the profits made on games released on the device. After Yamauchi found about it, he wiped his ass with the paper.

Nintendo went to Philips behind Sony's back to develope a CD add-on for the SNES. This too resulted in sort of problems, and in the end Nintendo, Philips and Sony were developing the CD add-on together - until this project crashed and burned as well. Not only this have something to do with Playstation, but also CDi is a "SNES CD-drive", and the cover in minidiscs comes from this project.

I don't know has Nintendo regretted what happened for two reasons: 1. All this stuff was for devices that would be just an upgraded SNES, meaning deviced that had preceded N64/PS/Saturn anyway. 2. It sounds naivistic that Sony would not enter the console market anyway. They had made the same notion Yamauchi made while wiping his ass with the Sony contract; why should they share the profits.