It's admittedly very true that you can't use a console to replicate fruit loops, Saturday mornings, and CRTs. They all do still exist, though I'm not sure you should need those things to enjoy the product. In fact I don't think it works with old CRTs at all. Doesn't it use HDMI? Oh well.
It doesn't have to be about nostalgia, either. Isn't it like the cheapest legitimate way for someone who never experienced NES to see what it was like for themselves? It's also a collector's item like you said. There are plenty of games on there I never played because I didn't have an NES for very long. My parents got rid of the NES when the SNES came along.
I've seen the things people do to their rooms in dedication of Nintendo, or at least retro stuff. It may not be for everyone, but I can see this being an easy sell.