Counter argument: by drip feeding emulation titles they way that they are, they’re introducing gamers to a great many lesser known titles.
When someone has 100+ games to choose from, most people will be overwhelmed by choice and end up sticking to the household names. But by limiting the choices you perversely encourage people to try games they haven’t played before.
Seems like you would do just as well to front page promoted games and let the rest be searchable. Right now I make zero purchases because I don't want to invest in a platform that has 1 out of 20 retro games I'm interested in.
The Switch, like all consoles, makes the bulk of its money from games sales. Thus if you’re only interested in free retro games then Nintendo are doing the right thing, financially speaking, by not catering to you’re specific requirements.
Like yourself, I’m a massive retro gamer but at the end of the day current generation consoles make their money from games licenses. So any support they throw in for older games is strictly a loss making fan service.
In a way they do already charge as they're only available as part of the Online package (and N64 + Mega Drive are only on the deluxe Online package, whatever that's officially named).
As for why aren't those games sold individually, Nintendo used to do this with the Virtual Console on the Wii U -- which was literally their previous console. I'd wager there wasn't enough money in it to do that again. Or that they feel the Online subscription earns them more money than selling those ROMs individually.
Let's also not forget they've relatively recently launched a range of mini versions of their classic consoles. Granted they're just (IIRC) running emulation on-top of Linux but it still demonstrates that they're aware of this market.
Much as we'd like to assume Nintendo are incompetent because they're not catering to our specific needs, I think the more logical explanation is that us retro gaming nerds are a vocal minority. We love to moan about how much money Nintendo could make but if that were true Nintendo would already be doing it because they had done it previously, recently in fact, and thus already have figures about how popular these features are. And given how successful they are as a business, and how successful they are at milking their IP, they certainly wouldn't pass up the opportunity to sell ROMs if they felt there was a market there. But when you have Switch games selling for £50+, even years after their release, it's hard to disagree with Nintendo's outlook that Switch titles are a bigger source of revenue than re-releasing the same ROMs they've already re-released several times over.
When someone has 100+ games to choose from, most people will be overwhelmed by choice and end up sticking to the household names. But by limiting the choices you perversely encourage people to try games they haven’t played before.