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Doesn't Monolith Soft have a pretty decent foothold in the industry? Most people were pretty happy with Baten Kaitos. While we're talking about it, do you know who did more work on the title? Monolith Soft or Tri Crescendo? They're both credited with the game.
I know there was a pretty positive reaction to XenoSaga as well. Obviously Nintendo sees something worthwhile with the studio.
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Monolith Soft. is also an actual development studio, though, not a production house like Mistwalker.
The topic of "which developer had more input on Baten Kaitos: Monolith or Tri-Crescendo?" is volatile and has been debated before in the past. Most signs seem to point towards Monolith Soft., however. The credits on hand at Moby Games corroborates that.
Finally, the truth behind Nintendo purchasing Monolith Soft. is really quite funny, and, doesn't equate to much other than "well, they're another dev house under our wing." When Bandai was having serious financial troubles last gen, Nintendo invested in them, and bought about 2.6% of the company. Following the Namco Bandai merger, Nintendo held around 1.3% of the company. This stock was, basically, just sitting idle, and was useless for Nintendo since the original reason they even invested was so Nintendo could be the majority shareholder (they would have only needed about 5% of the company for that to happen, at the time) and make Hiroshi Yamauchi as president of Bandai. Anyway, in the end, Namco Bandai "purchased" back Nintendo's shares by giving Nintendo majority control of Monolith Soft. (Nintendo owns 80% of the company).
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The fact that Blue Dragon was outsourced to the fucking company that made BLINX 2 sort of, y'know, shows a bit about how much they really give a shit.
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While Artoon certainly doesn't deserve any accolades for their previous games (Vampire Rain, BlinX, etc.), they haven't made entirely only shit. Yoshi's Island DS isn't a bad game, neither is King of Fighters EX: Neo Blood on the GBA, and Blue Dragon is definitely a good game, though very basic and traditional. However, yeah, the majority of games they've put out thus far have been shit.
There's nowhere I can't reach.