I wouldn't call it a clear violation of 17 U.S.C. 1201, but it was a plausible one. I do agree that they would have been blasted for legal fees trying to figure that part out, however.

Nintendo had a leg to stand on, but it was highly dependent on whether the judge would find an emulator's primary purpose to be DRM prevention. A good judge that does research into the subject likely wouldn't find it to be the case, since the primary purpose is emulation and decrypting game titles is only a small part of that. Ending up with a luddite or corporate shill judge is always a huge risk, though.