I think they will definitely use DLSS5/6/7 whatever by the time Switch 3 is out, people doubted the Switch 2 would use DLSS too in the early days and how'd that go. 

The fact that you can just offload most of the lighting compute to Tensor cores/NPU cores alone will be a huge benefit to a Switch 3. No point in bothering with path tracing/ray tracing really if you just just have that done on Tensor cores and not bog down the GPU with that. The lighting side of it will likely get better with future iterations too, this is just the first attempt. Right now it looks like the DLSS5 algo is trained to basically add perfect Hollywood style lighting to each scene (so a key light, fill light, back light, and I even notice an eye light too) and for some people that's jarring, they can likely adjust this for future revisions, though I think some people do like this look even as is. 

How they feel about actual generative AI over art assets themselves ... that could be a different story, I think they'll be initially cautious about using that but eventually probably will cave on that too. It really depends on what the broader industry does. They have a few years now to just kinda sit back and see how this whole thing shakes out, Switch 3 you're probably talking about a chip decision on that still be 3-4 years out from today (2030), by then Nvidia will be well past the 50 or even 60 series and you'll probably have DLSS7 or something that is a lot better than DLSS5. 

The Switch 2 supports it, yes... but Nintendo themselves has yet to use it in any games unless I'm mistaken. Similarly I think they will be the last developer to use DLSS 5 etc

This is mostly because Nintendo hasn't released too many games with motion vectors available, and DLSS requires motion vectors. Their first wave of Switch 2 games started development on Switch 1. They're not philosophically opposed to DLSS given that the Pokémon games have it, and they published them.  

This is mostly because Nintendo hasn't released too many games with motion vectors available, and DLSS requires motion vectors. Their first wave of Switch 2 games started development on Switch 1. They're not philosophically opposed to DLSS given that the Pokémon games have it, and they published them.  

This is mostly because Nintendo hasn't released too many games with motion vectors available, and DLSS requires motion vectors. Their first wave of Switch 2 games started development on Switch 1. They're not philosophically opposed to DLSS given that the Pokémon games have it, and they published them.  

I still don't want more AI because of the water wasted to cool the data centres. Not to mention the chemical added to said water can't be removed, and because of the emissions from the data centres said chemical is going into the atmosphere and rain, hurting animals and humans alike.

How do you avoid those problems?

Pokémon isn't made by Nintendo, but by Gamefreak, so it doesn't really demonstrate that Nintendo are open to using it.

This too is not an accident or limitation of Switch 1. And this is not me saying that I suspect Nintendo will never use it, just that they will quiet literally be the last to use it.