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But on the Switch of course they would have to make massive compromises if their engine was already so badly optimised to begin with that it probably wouldn't be worth reconstructing it from scratch to run well on Switch.

Yeah, that's basically it. And don't forget, the concept of game world streaming is relatively new and very ambitious especially for a indie studio – much more difficult than a racing game (not at all in disregard the accomplishments of Shin'en). That's been pretty much the whole culprit for this game here: the world streaming engine. Very ambitious and, if done right, you can actually increase performance with it. But it's also a very core part of the game engine and something that's very difficult to change later on. Really, the RiME engine wasn't made for the Switch. And the only way to have had it run properly optimised on it would have been to completely rework the engine and with that (since almost everything breaks when you do that) rebuild the whole game. That was something they just could not afford to do.

When it comes to the comparison with Shin'en's port of Fast Racing Neo it's a different situation entirely, not just the type of game. The Switch is more powerful than the Wii U so that port was much less likely to run into performance issues than porting from a more powerful system. So porting from a less capable machine, being able to upgrade where possible while keeping performance consistent or better was an advantage for Shin'en in porting FAST Racing Neo.

My whole point is that you shouldn't be too quick to compare the two this way, as the nature of their projects were very different in many ways. Even if Shin'en is indeed the more capable one, Tequila Works was at a disadvantage on all accounts in this case. So really, while not as unfair of comparing to Nintendo's Zelda or Bethesda and Panic Button's accomplishment with Doom, it's still not really comparing apples with apples.

Really, this game on its own under-performs and it's got big issues, especially on Switch. It's not advisable from a consumer perspective to get the game on Switch unless you really considered its performance issues and still want it on Switch. But one game is no grounds on how to judge a studio and comparisons with other games aren't always fair. I wouldn't be surprised if they have learned a lot by trying to port to Switch (and other systems). Hopefully they can apply what they've learned in their next project.