I think everyone is sort of missing the point here. I find it much more likely it's nothing to do with quality or content. There were a handful of M-rated titles that made it onto the wii u and wii respectively. They said in a Senate hearing that it would never be on a Nintendo system, and it isn't. It's much less flattering to turn your back on what you say in a courtroom than to turn your back on releasing one title. Is it the best call, maybe not, you can split hairs. However, they are staying true to the words of their (then) president.
Edit:
Relevant clip is here (with timecode)
Whole hearing is here, the bit I'm referring to is 1:25:55:
Their statements about violent video games are certainly representative of the period and have changed, but he stated for the record that Night Trap will never be on a Nintendo system and it makes sense they would stick to it. Howard Lincoln is a lawyer, after all.
But that hearing is a joke meme now.