Also quite interesting this question already came up on Quora https://www.quora.com/What-is-the-smallest-in-size-Linux-ker... and also on many other websites: https://superuser.com/a/370588
A microkernel with feature control at the process/service level would actually have much worse feature control than Linux, because Linux build time configuration options are often quite a bit more finer grained than that. For example, you can build Linux for uniprocessor systems, which makes global build-time changes that disable certain kinds of locks, which makes it smaller globally. A microkernel could or could not have the same build-time feature; it is not guaranteed to.
As others have pointed out, microkernels have performance overhead and that reason alone makes them unsuitable for an N64. On a game console you need all the performance you can get.