Dev launcher is a stripped down version of Retail Launcher (and as you expect it does not have the health & safety screen). It lives in the .code section of twlBg which is a CXI that runs on Arm11 during boot of TWL_FIRM. It's section0 of TWL_FIRM's firm section. TWL_FIRM also has it's own version of boot2/bootloader that loads dev launcher into FCRAM from twlBg. The main difference in how it operates from retail DSi, is boot2 on TWL_FIRM does not load launcher from TWLN partition like it would have if it was retail DSi boot2.
Thanks to CFW on 3DS, you can replace dev launcher/modify it or do other things like install homebrew SRLs direct to home menu that has arm7 scfg unlocked by setting bit31 in 0x1b8 of their DSi extended header. That works because TuxSH/Steveice10 found the RSA sig checks in TWL_FIRM and patched them out in current CFWs like Luma.
(TWL_FIRM's arm9 checked the RSA sigs of SRLs and not dev launcher. Dev launcher doesn't seem to care. More on that further below)
Dev Launcher uses dev modcrypt and likely dev sigs as well (though twlBg/boot2 does not sig check it. I guess because the chain of trust has arm9 section of TWL_FIRM verify sig of twlBg, so it doesn't bother also checking dev launcher) The main limitation from trying to replace dev launcher with retail launcher is that TWL_FIRM/twlBg's memory layout in FCRAM only allocates 1MB to it. This is enough room for dev launcher, but retail launcher is quite a bit larger. Retail boot2 might fit though but I have no idea how to deal with the encryption of boot2 and since it's a little larger then what TWL_FIRM has, I can't just insert it into twlBG without breaking some code that occurs after it. TWLTool can decrypt boot2 of TWL_FIRM but does not appear able to rebuild/reencrypt at the moment so I can't even fix boot2 from DSi to work in twlBg in the first place.
Dev launcher will likely not work on a DSi. You may get it to run on a dev DSi, But certainly not on a retail unit due to dev mod crypt.
I have the decrypted SRL if you want to look at it. The interesting thing is, dev launcher does not appear to sign check SRLs that it loads. It's actually arm9 section of TWL_FIRM that does that....If you could ever get it to run on a dev DSi, it would not even bother checking the dev sigs of the installed SRLs. I'm not even sure it will boot on a DSi though. I think with the way things are setup. TWL_FIRM sets up the environment for dev launcher. On a DSi, this was all done by retail launcher for the most part (for things boot2 didn't do first)
So like you mentioned, the wifi init wouldn't even occur on dev launcher because TWL_FIRM/boot2/bootrom of TWL_FIRM would have set that up before hand. I could be wrong though. No telling what TWL_FIRM sets up and what dev launcher does. I always assumed dev launcher was just a stripped down no menu version of retail launcehr that only really just auto boots an SRL. It auto boots a TID passed to it by TWL_FIRM's boot2.
EDIT: Now that I think about it, you might be able to get something that resembles DSi bootrom from TWL_FIRM. It's either stored in TWL_FIRM or accesible during boot. Becaue the 3DS has been throughly hacked to death, you can certainly modify TWL_FIRM to your hearts content to try and keep things unlocked when your SRL fires up. Normmatt tried that not too long ago. Never heard if he was successful though. I think he'd would have had better luck running his dumper as a direct replacement of dev launcher instead of trying to patch things out of dev launcher.
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Sorry for all the edits. I'm always missing something and have to tack it on or fix typos.