I suppose Xenosaga backed with Nintendo marketing and virtually no other competition from other RPGs would stand a better chance than it did on the PS2, but I still think that isn't the direction Nintendo wants to go with Monolith.
Partly because their first collaboration, Disaster: Day of Crisis isn't an RPG (I think). But mainly because the reason Nintendo gave for their acquisition of Monolith was that they "share the same vision". Somehow, I don't think hours of cutscenes is part of Nintendo's vision.
Now, that could have been a bunch of BS, but if it isn't I believe Nintendo wants Monolith to move towards more action-y type games. They would still be story driven games with a fair amount of cutscenes and voice acting and whatnot, but with gameplay having much more of a focus.
I also see the connection with SK, and I believe that's what Nintendo wants from Monolith. I think Monolith has more potential saleswise than SK simply because they're a Japanese dev. Japanese games have a chance of selling well outside of Japan, but SK's western style really only limits potential success to the west.
But isn't all this talk of Xenosaga moot anyway? I haven't played the last game, but I thought the story was supposed to be wrapped up.
If we do get any Xenosaga lovin', it will probably only be ports of the trilogy.