There is one problem with your argument.
Emulated Switch games run fluently on a Steam Deck.....
In difference to previous Nindendo consoles the graphics API of the switch is very similar to "normal" PC/Console graphics APIs. Sure somewhat older ones but you can run many "switch old" PC games on modern hardware, if there are problems they often come from areas like DRM. But most switch games don't have DRM additional to what the switch provides...
I mean this similarity is one of the major reasons why there are so many 3rd party games from smaller studios one the Switch. (Through due to the switch hardware being incredibly slow for modern standards this is increasingly no longer the case as it requires small studios to better optimize their games, and while many of this optimizations are not switch specific at all they still are costly for a small studio).
Through there are some problems, one is that there was no (usable) successor for the chip they used.
My guess is:
They originally wanted to bring out a bit faster "switch pro" but due to a combination of there being no (usable) successor to the chip they have in the Switch and COVID and chip shortage and the CPU market stalling wrt. improvements (when the decision was made), and crypto mining making Nvidea not care about making a Chip for Nintendo they decided to skip it and bring out instead just the OLED upgrade. I.e. they skipped the next console directly went to developing the follow up maybe with the hope of bringing it out a year or so earlier.
But now on one hand the generational improvements in the CPU marked stopped stalling on the other hand maybe their follow up has delays due to technical challenges.
But in the end it's probably a financially good decision to just stretch out the life of the Switch. The only risk is that people will stop buying the switch or switch games because it being so slow that it isn't fun anymore. But given that people will still buy the new Zelda and the amount of money they made with the Switch and saved by cutting the development of the hypothetical direct successor that rally doesn't matter to them. It still sucks for the gamer anyway.