I guess you are right about the demand part.
Maybe later on down the line when consoles like those get older, then people would want to buy a suped-up N64 for $250.
They could probably just make all the games free for it since you can already emulate them on a PC.
The business model for it would actually be pretty good if the demand was there. Compared to what consoles cost to make now, a Xbone being $471 and the PS4 being $381, making a console for $50 and then selling it with a controller for $250 with all of the games for it free direct from the developer would be quite good for both the buyer and the seller.
Then you can sell some of the controllers (or maybe ever allow the originals to be used to) for like $25 each.
I mean, for a company like Nintendo, are they actually making any money off of their old games for N64? So giving them out for free would be just fine.