Yuzu gave them the opening to sue though. If they had been more circumspect - "Oh this is to develop homebrew / indie games nudge nudge" then maybe Nintendo wouldn't have unleashed the lawyers or done so ineffectively. After all it wouldn't be Yuzu's fault if some wicked website corrupted their pure intentions by releasing device keys or patches that allowed their emulator run commercial games. But they were more blatant than that.

Also from an empathic perspective, of course Nintendo were going to sue. Yuzu should have known they would since that's what console platforms do when something interferes with their profits. Yuzu is doubly bad since it interferes with hardware sales and game sales unlike custom firmware / cartridges which only affect game sales.

Of course the genie is already out of the bottle. Yuzu's source code and binaries were on github for anyone to clone / fork. All the games are out in the wild. The piracy will carry on. I think it's fair to say the NSP is effectively dead as a platform at this point. If a NSP2 turns up this year, as rumored, then I expect it will have revised anti-piracy measures and potentially a heavy online service aspect to go with it - it's far easier to detect pirates and wield the banhammer when a device is online.