I'll take a stab at a different approach.
I've seen you take this "conservative" standpoint pretty frequently. You're convinced the reason that the land is so small is because Universal Creative or USH Management or someone didn't believe that the IP would do well and so they trimmed the land down as a way to manage any losses. I think you're assigning motive to that decision that isn't necessarily there. There's calculus going on at levels that we are simply unaware about. I don't think the land is small because they didn't think it would do well. They wouldn't have already greenlit the land in three separate parks if they didn't think it would do well. I think the USH version of the land is small because they wanted to do something even bigger later on down the line.
As discussed, USH has to worry about land usage much more than the other parks do, particularly when it comes to theme park expansion. Pre-SNW, there wasn't anything inside the park that was big enough or unpopular enough to tear down in justification for building SNW. Even if we assume that the current size of the land (about 3.25 acres) is the minimum size for the land, the only area that's big enough to hold it is the Studio Tour loading area and the Tram Garage behind it. But it's in a rather awkward configuration and then there's the matter of having to move all of that infrastructure somewhere else. So SNW has to be an expansion to the park. Two locations had been marked for future theme park expansion: the current site of SNW and the plot of land on the other side of Transformers where those four sets of soundstages are, which are 3.25 acres and about 4.5 acres, respectively. I think that Nintendo was planned for the bigger plot, probably still without DK but maybe with Yoshi and more interactive stuff, and something else was planned for the smaller plot. Then something changed.
For the last decade or so, Los Angeles has been angling to host the Olympics and was originally trying to get the 2024 Summer Olympics. I think SNW was always intended to open in Hollywood in 2023 or early 2024 as a way to ride high on the sudden swell of international tourists rushing into the city for the Olympics. The studio side was planned to be the international broadcasting hub, so why not capitalize that way, too? Something would open in the smaller plot in 2021 or 2022 and then SNW would open in the bigger plot a year or two later. But, in summer of 2017, the International Olympics Committee announced that Paris would get 2024 and Los Angeles would get 2028. Suddenly, that pressured timeline to get something big open ahead of the Olympics was a lot more relaxed. And USH had a decision to make. They could still save SNW for the Olympics, and open it in 2026 or 2027, but that would be several years after Japan and Orlando (which, at the time, was going to open SNW in IoA instead of Epic) and we all saw what that sort of thing had done, numbers-wise, to Potter. Or they could shuffle things around, present a trimmed down version of SNW with the big ride and most of the interactives intact in the smaller plot, and save the big plot of land for something else that could open up right on schedule with the 2028 Olympics.
I don't think they underestimated Nintendo. It seems to me that they appropriately estimated Nintendo in thinking that it would still be popular, would still make money, and would still draw in crowds even with a smaller version than they originally intended. They had to choose between a) opening a bigger but vastly delayed Nintendo, and b) opening a smaller Nintendo and opening something even bigger further down the line. I don't think anyone in here would have been happy to wait another four years for a Nintendo if the only difference was Yoshi and a few of the interactives.
