Unfortunately, it's more of a gray area than most people think.

17 USC §1201 (f)(1)

Notwithstanding the provisions of subsection (a)(1)(A), a person who has lawfully obtained the right to use a copy of a computer program may circumvent a technological measure that effectively controls access to a particular portion of that program for the sole purpose of identifying and analyzing those elements of the program that are necessary to achieve interoperability of an independently created computer program with other programs, and that have not previously been readily available to the person engaging in the circumvention, to the extent any such acts of identification and analysis do not constitute infringement under this title.

Ok, and that applies to...

17 USC §1201 (a)(1)(A)

No person shall circumvent a technological measure that effectively controls access to a work protected under this title.

And a technological measure is:

17 USC §1201 (a)(3)

to “circumvent a technological measure” means to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner; and

Perfect! Right?

17 USC §1201 (a)(2)

No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that—

(A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title;

(B) has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under this title; or

(C) is marketed by that person or another acting in concert with that person with that person’s knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title.

And unfortunately, Yuzu is capable of and needs console keys to decrypt games and system firmware files.

The reverse engineering for interoperability exception, (f)(1), only explicitly exempts (a)(1)(A) for research purposes. If Yuzu—as a software product—is found to have the primary purpose of circumventing Nintendo's DRM, it will be in violation of (a)(2) and the developers are not protected.

This is something that will need to be tested in court, but the only way they would be entirely in the clear is if they stripped out all encryption/decryption code and forced users to use some other tool to fully decrypt the firmware, NAND filesystem, and game image filesystems during dumping. They'll likely argue that the primary purpose is preservation, and Nintendo will use the fact that the Switch is still sold in retail as a counterargument to suggest that their development of the emulator was unnecessary and not in good faith. If they instead argue that it was created as a development or debugging tool, Nintendo could point to their low barrier of entry for developers to obtain a devkit (as evidenced by the crapton of shovelware and asset flips in the E-Shop).

If they don't settle, it's going to be an expensive mess to sort out.