Nintendo does good work, I'd want them to do it. I don't like that they rely on other studios...
Which Nintendo owned studio do you want to make the game though?
Backlash? I really don't think there would've been any backlash, considering most were expecting their game to be Star Fox.
Are you kidding me? There would be tons. Look at what happened at E3 2013. I wouldn't say most expected Star Fox. Most wanted a new Metroid. People said, and I do quote, "Retro talent would be wasted on Star Fox." Just look for an older post asking what project you want Retro to do. Metroid was the number one, then new IP.
My obvious choice would be Namco, but just because of the Ace Combat games.
Besides them, Treasure - like mentioned above -, Sega (all those Panzer Dragoon games and Space harriers). If you want to keep it more arcade-like. For something more serious, probably Konami, Platinum Games, Ubisoft.
Ubisoft would be an interesting choice. Lets make it happen Nintendo!