Yes, Nintendo is stupid. They see capitalism as a zero-sum game, and so any time someone has or keeps their own money, that's the same as Nintendo losing that money, so they do whatever they're legally able to do to ruin people financially, going as far as taking 30% of your income for the rest of your life if you do wrong by them.

No but Nintendo is fiercely protective of all of its IP. We know there's not really harm being done here but it is within their rights to block this and that is the road they always choose.