A movie with this tone would be amazing, but I think this is probably a bit too scary for kids. 

These guys got hired by Sony to make Kena for the Playstation I think in part because of this short, lol. 

Well I thought it'd be nice to see Illumination branch out to something like that. It'd show audiences the studio is willing to treat kids like adults. I know Despicable Me did that to an extent (A few gags in the movie were about murder), but if DreamWorks can go further then why not?

I'm kind of curious if the Nintendo movies going forward will even be "Illumination" movies because I don't know if Illumination has the staff to do all the Nintendo movies that are probably coming and still do their own stuff.

I suspect the better setup will be that Universal (if they do land a deal to get the rights to other Nintendo properties) and Nintendo will set up a studio specifically for Nintendo which Chris Meledandri of Illumination will oversee with Mr. Miyamoto.

Universal also has the Dreamworks Animation division too, so they could work with Nintendo also.

Illumination has a kind of different approach to animation too ... the story team is one team, but the animation is then farmed out, this allows for their movies to be made more cheaply. So there isn't really like an "Illumination Animation + Story" combined team all in one to begin with. 

DreamWorks working in tandem with Illumination and Nintendo should work, because Nintendo will keep the rights to the movies anyway, right?

I believe so yeah, the deals are actually technically between Nintendo and Universal Studios, so Nintendo should be able to work with anyone at Universal, though I do suspect Universal will simply just make a new division for Nintendo entirely and then Nintendo/Universal will just farm out the animation to different studios (which is what Illumination does). 

So it's more feasible than I thought that we'd get a Zelda movie in the style of Into The Spiderverse?

Thinking a Legend of Zelda film could look similar to Princess Mononoke.

But how would a movie in that style of animation draw people to theaters like the Mario movie has?

I think you can add a Ghibli "tone" and maybe some flourishes while still keeping the core animation CG, like I'm thinking some kind of hybrid of 90% CG look but just a dash of 10% Ghibi/Japanese anime styling.

But full blown anime/hand drawn style I think is out of the question. It would limit the box office potential way too much, unfortunately there's just too many people outside of Japan/Asia who refuse to see a hand drawn animated movie in this day and age.

Zelda can be a billion dollar movie franchise of its own, and I think Nintendo is going to make damn sure they do everything they can to get it there, choosing an animation/art style that cuts your box office potential off at the knees is not happening. 

Beyond that also I think Nintendo will definitely want a Smash Brothers movie one day, and to make that doable Link/Zelda probably have to be CG like Mario and Luigi are. 

A little off-topic, and I realize this is prerendered and all, but still, you can see how far the technology has come in the last years just by looking at peach's dress physics - really impressive.