It would be competing with the iPad, but that's not a death sentence (see Kindle Fire, Nexus line, Surface, etc.) It's a hot space and contentionally the future of personal computing (as in, consumption/non-content-generational.)
I just think, Nintendo would be able to compete in that space since the Wii U would offer a "twist." "Buy the Wii U if you want a tablet, but enjoy real gaming." Maybe that's a smaller selling point than I imagine, but who knows, no one's tried it, and it gets me a hell of a lot more excited to think about than I ever got from Wii U's announcement to today.
It's not a solution to Nintendo's current implementation, but an alternate one. I don't think your "should haves" are off base. They've done a poor job showing why the tablet/asymmetrical stuff is worth a brand new console, and the specs are just a complete let-down from every single definable angle (except for maybe the streaming tech and the amount of RAM.)