Recently two fan projects have come out and quickly been taken down. Another Metroid 2 Remake, and Pokemon Uranium version. While I wasn't able to get Metroid 2 before it got taken down, though versions are still available online, I do have Uranium's install. But them being taken down does raise a question, should they have been taken down?
Legally, yes. Nintendo was well in their rights to do it and to them, they have to. The games do infringe on copyright, using their IP's without their permission. Companies do still have to protect their IP's because if they have to take down things that do put them in a negative light, they would have a stronger case because letting them thrive, the defendant can just go "well if they can get away with it then why can't I?" More often then not, these kinds of projects fly under the radar of the companies and if they do find them, and they're getting a lot of traffic, then they tend to ignore them, claim they had no idea they were a thing. Case in point using one that I've covered here, Pokemon Zeta looks to still be around, just that development has ceased for their current project, Pokemon Insurgence. It raises the question "Why would they?" as the same thing applies to fan animations, fan art, song remixes, mods and more. Well, with a few odd exceptions on the more darker side of the internet, it's free promotion material, so they only get involved when it gets enough public attention. For Nintendo, it seems to be the highly publicised fan games, but there are other examples of it from other companies.
Is it the only option? Not always. For every AM2R and Super Mario 64 HD Remaster, there are cases like Mega Man x Street Fighter, a game Capcom endorsed and promoted. One option Nintendo could do is come to these fans and say "if you let us take a large chunk of the sales for royalties and no PC version, we'll put your game onto our eshop", it would be free money to them along with a way of finding fresh tallent that could handle smaller projects. Its also a potential way to help with release dry spells like what's happening for the WiiU where the next and potentially last pure WiiU game is Paper Mario Colour Splash. While yes, the devs of the games would potentially be getting screwed over in terms of money, at the same time though most of them are making these kinds of games on a budget of nothing and putting them out for nothing, so to them, some money is better then no money. And in the case of quality control, Nintendo could easy say "if your game doesn't meet our expectations, we'll send a cease and desist" wading out the cheep cash grabs from the quality projects. Is it flawless? No, but at least it's better then "Anything that is not made by us is not allowed to exist".
At the same time, for projects like Uranium, what might be a better idea is to turn it into its own franchise, akin to something like Freedom Planet was to the Sonic Franchise. All they'd have to do is remove the connections to Pokemon like calling them Pokemon, changing Pokeballs to something else, and removing any main series Pokemon that are in teh game if any exist. I think all the assets in it, from what I've seen, are original aside from things like Pokeballs, so the changes would be minimal. This also lets them put the game onto Steam, and get some money for their efforts because legally, its not a Pokemon game. Its how third party transformers are still allowed to be a thing because legally, they aren't those characters.
It's a legal grey area, and there's no right answer, so the question becomes "what do you think is the better idea?"