It basically comes down to this: Nintendo wants to protect the traditional videogame market because it views it as a market of craftsmanship. By that they mean that when you invest in the development of a game, you price it accordingly, and that has led to the current market, which to some extent is healthy (certainly on Nintendo platforms).
Compare that to the App Store market where prices are low and, on other mobile platforms like Android, sometimes free, developers have less incentive to invest much as the expected return on investment is less stable. Sure, there are huge hits, but the long tail of the market is full of low-cost, low-investment stuff. Or as you called it, "shovelware".
I for one see Iwata's point of view and although it differs substantially from Apple's, I think both companies serve different markets, with different goals and ideals, and both can exist. That's why Reggie says they're not currently interested in serving that market. It's a different market.