The emulator itself doesn’t necessarily have to exist only to run retail games. It could be used to develop or debug homebrew and marketed as such. They wouldn’t even need to have decrypted the operating system to understand it, as Atmosphère is a complete reimplementation untainted by Nintendo code.

If it ran retail games as a consequence of being accurate to real hardware, that would just be a happy accident. And as long as the developers don’t acknowledge running retail games and don’t directly assist in fixing them, they have plausible deniability.

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?

I’m a big fan of the “buy a game and crack it right after” philosophy. Respect property rights until something is in one’s legitimate possession, and then remove any encumbrances preventing it from being used in the way the purchaser wanted.