Ye, the sm64 was just a jit emulation, you are correct there. Not gonna deny that either. The sms and smg emulations are interesting and impressive though. They basically use a combination of jit compilation and aot compilation to basically take in the rom and adjust code as they go, but its technically running +/- natively, if i read the switchbrew wiki page correctly, thanks to the aot compilation. I find that impressive, from a technical standpoint.
Could they have added more and do more changes? Yes, ofcourse. Im not saying the fan made stuff isnt impressive, it is and i love it!
But for nintendo, who strives to create new experiences and things, not rehashing older stuff, is why they kept it basic. For them adding that stuff doesnt make sense as the game doesnt add new enough experiences. They dont care if a bug is fixed or graphics are improved. Those dont get you new experiences or gameplay mechanics. Thats what nintendo strives for.

Again, if that is a good stance to have as a company i leave up to others to make opinions on, thats not up to me to decide or voice my opinion on ^^

Fyi, since you seem to know what youre talking about, nintendo's r&d have used open source projects before internally and we assume it is done to look at older games and see how they worked or if they could be used to make projects like sm3d ( without doing what the license doesnt permit )