I'll start by saying I absolutely love my steam deck.
But this line of reasoning is silly. No price point will make Nintendo sweat. The steam deck is very popular for any kind of dedicated PC gaming device, and insanely popular for a Linux based device. It's less than a blip on Nintendo's radar screen because it literally doesn't compete in the same space as their product.
If they want to make Nintendo sweat, it needs to natively play Nintendo exclusive titles (impossible) and be a flawless pick up and play user experience with zero tinkering (doable but it is miles away from this, and I don't think they intend for it to get there).
Again. I love my deck. But it does not and does not need to compete with switch. They do and should coexist happily together.
Yeah it definitely is, which IMO further proves my point. It's not even hard to play Nintendo games (even switch games!) on the deck right now. It's awesome for tinkerers and enthusiasts, but it is in no way impacting Nintendo's sales or bottom line in any appreciable way. People who love emulation don't like to hear this, but the vast, vast majority of people would rather purchase, own, and play games on the platform they were intended to be played on. Switch hardware and software sales numbers are ample evidence of this.
As for Nintendo and their reputation of going after fan game projects, emulators, etc...They kind of have to. I think Nintendo realizes their special sauce is their exclusive characters and games, not their hardware. If they don't defend those trademarks they run the risk of legal challenges to their ownership of them. Whether that justifies them being as aggressive as they are is debatable, but I do think this is the more likely reason they are litigious than the idea that they are actually worried about losing console market share to the Steam Deck.