...
I like your idea of an actual first-party NES replacement. That would be great.
But there are a bunch of retro consoles that play NES games on the market now, not to mention a bunch of old NES consoles available as well. Pricing of those consoles don't convince me that what you say regarding pricing of a new production line would be accurate. (Oh right, but there is that $40 Genesys console that offers terrible build quality and poor emulation... let's throw that into the comparison just for fun.)
Nintendo is offering
Product A - a quick and easy blast of nostalgia that comes in a small, stand-alone package and doesn't require any extra purchases (ok, maybe buy a second controller) to start playing right away.
You want
Product B - a niche product aimed at hardcore collectors who already have games or are keen to start tracking them down and collecting, that isn't as small or convenient.
Both are good ideas, but they are different ideas and it sounds like Nintendo has clear goals about where they are going with this product. Get over it.
... I wonder how long the cable will be on the new NES controller. The normal length probably isnt going to be enough
This is a good point. There are clearly ports for controllers on the mini-console, so I'm assuming no wireless. Not a deal breaker, but it does make you wonder about cords and cables.