Nowadays there's less stigma attached to the idea of being a ruthless businessman. In fact, it's often considered meritous. So I don't think it would be disrespectful to highlight some of the things he's done. After all, it's a testament to what it took to build a company of the caliber of Nintendo.
What sort of strategies did he employ?
But the design and specifications of these cartridges was protected by Nintendo, so the only way to distribute a game was to ask Nintendo for cartridges. Because Nintendo would only allow quality games on its shelves, it would test your game before allowing you any cartridges, so your game basically had to be nearly finished before you could ask Nintendo for cartridges. Of course if you were refused at this point you would have already invested tons of money so it would be pretty ruinous.
Besides the go/no-go signal, Nintendo also controlled the _amount_ of cartridges you would get. If Nintendo decided (much like Apple did in recent years) that your game was more valuable if it had limited copies, then you wouldn't get many copies, regardless if that would leave you with not enough revenue to make a profit.
Reasons for refusal of cartridges were both fair and rather unfair. For example you could be refused for lack of quality, but you could also be refused because another game in your genre already had shelve space and they didn't want to endanger its dominance. Basically you were at the complete mercy of how Nintendo wanted to make maximum profit for it self.
I have heard, though I don't know for sure (maybe someone could check it :P) that Atari eventually went bankrupt because it decided to make a Nintendo game (as a last resort perhaps), got into a conflict with Nintendo, sued them, and lost..
Atari is relevant here for a different reason, since their Atari 2600 partly failed because they did not have good quality control schemes, and because low-quality buggy third-party titles flooded the market (famous examples: PacMan, E.T. - The Extraterrestrial). Consumers simply lost interest in spending money for titles that didn't work (something I would like to see in the PC market today). A couple of years later, the Nintendo Entertainment System won the customers back partly because they controlled their market.
R.I.P. Hiroshi Yamauchi.
The Famicom did have some amount of Atari 2600-goldrush-esque crappy games (some licensed, some not), but it didn't stop the console from being a huge success. This suggests to me that Nintendo's reasoning was only part "Americans will flood the market with shitty games again if we don't do something about it," with pure monopolistic greed being the other part.
With all due respect to Hiroshi Yamauchi, I don't think their business practices during this era should be considered at all admirable, and I don't think it's right to credit their monopolistic practices for "saving the medium."
sillysaurus2: this has some of yamauchi being a ruthless sumbitch.
[1] http://arstechnica.com/gaming/2013/07/time-to-feel-old-insid...