If they just used freaking regular CDs... DVD capability is what made it lose.
I think the use of CDs would have helped the N64 way more than the GC.
N64 would've sold 70+ million units easily IMO if they had compromised with their SNES third party partners and used cartridges and CDs (a cartridge slot costs practically nothing to keep).
I think they beat Sony that gen, they would have retained Final Fantasy VII and companies like Konami would not have been able to justify not having at least multi-plat N64 versions of games like MGS and RE1/2/3, combined with Mario 64, GoldenEye, Zelda: OoT, and Sony would've been toast.
CD + cart combo games could've been a smart way to go too ... you could off-load all music, voice, FMV, and a lot of other data onto a 10 cent CD disc, while keeping game/level data on a smaller sized cartridge (no need to go up in cartridge size and make the games even more expensive).