I doubt there's much, if any profit margin on the consoles themselves. I think it's pretty typical for consoles of all brands to be sold at a loss in order to capture customers for their ecosystem where they will buy games and other media which have very healthy margins.

Nintendo's biggest concern is probably controlling the experience. While it might not be a marvel of gaming technology on the Switch, it is consistent. Allowing it to run on any old computer hardware means a lot of it will be poorly optimized as a rule. non-technical people will likely have no idea what that means; to them it will just be a shitty gaming experience and they will then associate that experience with Nintendo. Technical people will probably not even bother and they'll just emulate it for free instead of paying $70 for a game that isn't going to have any official support on their platform. There's really no upside for Nintendo in this plan.

Sure, but they probably make the majority of their profit on sales of games.