I think this is three different set of questions.
1. Should Games really be pushing GFx heavy / realism vs Nintendo Style Game?
Well first I absolutely love Nintendo and their Games. But the answer is first, Nintendo's target market is very different to PS5, Xbox / PC. I am sure Battlefield fans just dont think it will work on Nintendo style graphics. Second it really have nothing to do with Game Dev, more to do with Games priorities. i.e The question then becomes a Design / Market Fit / Choices questions rather than a technical question.
2. Keeping Games Efficient.
AAA Games, or as a matter of fact nearly all Games are efficient, comparatively speaking. Just look at how browsers, one of the most optimised piece of software is still learning their lessons from Game Dev. Games are using as much power as they could to push the limit on Graphics, and Physics within Games. That is not an efficiency question, but how much power they could push the boundary. Remember 4K Res is FOUR times the resolution of 2K. 120 Fps will be TWO times the normal standard of 60fps, that is 8 times the complexity alone excluding any additional high quality asset or modelling. I didn't even put Ray Tracing in that equation into it. Even if you assume 600W gives you double the performance of 300W ( which it doesn't ). You already see the disparity between complexity and performance improvement.
Finally, the third point I want to mention is hypothetically speaking Ray Tracing will lower the cost of Graphics Asset, which is by far the largest cost centre for Modern Games. Since designer no longer have to do all sort of special tricks for effects and save them some time. Although I imagine in reality these saved cost and time will only be used somewhere else for even better graphics.