I don't know if this would 'satisfy' them (I know it wouldn't, I'm referring strictly to the legal stuff). From what I've heard, the point Nintendo was making wrt the encryption is that aquiring prod.keys in any way, shape or form is illegal. Of course, creating an emulator for a system that only runs games that contain encryption which can only be undone with prod.keys requires the developers to have this file. Since they've successfully made an emulator, this implies that the Yuzu team has in fact obtained a copy of this file and done something naughty.

The problem is that, regardless of whether or not the decryption happens in Yuzu or in another completely separate program, modern Nintendo games do not come unencrypted. This means that someone at some point has to decrypt the files, and thus has to use prod.keys to do so. According to Nintendo, using and creating any emulator for a modern system requires someone to do something illegal at one point in the chain, and therefore emulation (by parties not explicitly authorized by Nintendo) cannot legally exist.

I say that Nintendo should piss off after I've bought something from them and that I should be allowed to do with my property as I please, but even the most legally and morally correct way to emulate is not okay with them.

This raises the following question: if Nintendo does not respect in the slightest our property rights by pulling such stunts, why should we as end users respect their intellectual property rights? Why go through all the effort of clean room reverse engineering a console instead of blatantly copying as much of the official code base as possible if the legal system punishes you all the same? Why limit yourself to only emulating games you personally ripped from your own cartridges if the act of ripping has already placed your actions into the "illegal" category?