I'm sure Microsoft Rare can develop for Nintendo handhelds, they've done it in the past. Microsoft will not sell Rare any time soon, they currently have an Xbox One game in development.
At this point, with most of the original team that made the good games already out of the name. I'd say they can keep the name.
The important thing is to find the names, they matter way more than the brand.
Buying the company back would be mostly just to get back the rights to some franchises.