For the most part I agree with bigjim, but here are my own answers just the same:
"What would happen if they became #1?"
To put it simply Nintendo would take Sony's place. No duh right? But what I mean by that is the number of third-party exclusives Sony gets would shift nicely under Nintendo's umbrella. But there's a little more to it than that. Judging by the quality (or lack thereof) of ps games, I think it would be safe to presume that Sony gives third-party developers pretty much free reign. This is not the case with Nintendo, at least not too often. With Nintendo in the number 1 position they would have the ability to dictate some guidelines for their games. Now obviously they don't want to bully developers and scare them away, but i think they'd expect more of them, and we'd all benefit. Also I would have to say that Sony would move into the number 2 position. Xbox's only sell in the U.S. and initially sony will be strong no matter what happens later. people are generally loyal when it comes to any kind of major electronics. Also I think it'd be rather difficult for sony or ms to copy the controller. Not that the controller itself would be hard to duplicate, but rather the receiver that Nintendo is using to make sure it works with all t.v's. That technology has to be pretty proprietary, as in right now it's the only way to do it. so Ninty's competitors would have a good deal of trouble going around the patent.
"Would Nintendo being #1 with the revolution effect their handhelds at all?"
I think it would. There was another thread, the revolutions last big secret. Here's what came to me while reading big jim's post. What if the one of the last secrets (hopefully not the BIG one) is that the rev will play games from every system right out of the box. this is actually just an expansion of the thought that the ds will have connectivity to the revolution. the revolution is sort of a ds for the t.v so i don't think it would be difficult. Being able to play gba and ds games on the rev will boost sales of those games as well. If someone doesn't have a need for portable gaming, then it's like hey, I can still play these awesome games and not need to buy another system. While that technically hurts the sale of the portables, the games are what counts, that's where all the money comes from, and it's also one of the ways developers decide whether or not its worth making a game. Even if it can't play every game from every system right out of the box, don't be surprised to see DS connectivity, especially since it could easily be done with wires, and sony and ms are doing it.
"Is it even possible for the revolution to boost Nintendo to #1 again?"
Anything is possible in this world. If back in the SNES days you told me that in a couple years Nintendo was going to 3rd overall in sales in the U.S, 2nd in the world, and Sega was no longer going to make consoles. I would have laughed you to scorn. But look at us now. As i mentioned before I believe Sony will be initially strong even if they later flounder. However, also as I mentioned before the Rev is sort of a DS for the t.v, and if the DS is anything to gauge by, the Rev has a good chance of becoming #1.
"I'm wondering what do you guys think (even the haters)"
I think I'm going to start making it clear when I make a tongue in cheek comment. lol. While I know there are no real haters, there are people who love to disagree. I read a lot of books, and every book is worthless without an antagonist, if a "hater" posts, thought is stimulated, and we may surprise ourselves with the respones we come up with defending our thoughts. That's what I think anyway.