Zelda II's reputation got a lot better in recent years, when people started to look back at it without the bias of the past, but it doesn't change the fact that it's always been the unbeloved step-child of the franchise that even its creator calls out as the one game he isn't satisfied with.
You have it entirely backwards. Zelda II's reputation only got worse as the series progressed and 1) new Zelda fans tried it out and couldn't handle the difficulty and 2) older Zelda fans went back to it and couldn't handle the difficulty. Look up contemporary reviews of Zelda II, dig through old magazines and see what the buzz was. There wasn't this stigma that there is now of it being a terrible sequel to The Legend of Zelda. Same with Super Mario Bros. 2 for that matter. I wish I could actually cite some reviews to back my case, but I'm sure that anyone with a collection of game magazines circa 1986-1988 can back me up.
And Miyamoto only said he thinks that they could have done more with it, that it only came out as they "planned it on paper". I can recall interviews from around the time of Ocarina of Time where he expressed the desire to make another Zelda II like game, and only years later in the OoT 3D Iwata Asks was it revealed that he and Yoshiaki Koizumi were actually working on a polygonal version of the game for the Super Famicom.
Nevertheless, you still chose to ignore the point that renders your whole argument mood: Wind Waker entered production when Yamauchi was still in charge of Nintendo. Saying that he wouldn't have allowed the product to survive is quite simply false, since he did allow the game to survive. Yamauchi likely wasn't as much in control of the company in his last year as the years before, but I'm sure that he still gave his okay to the more important game projects of the company.
That's funny, I don't remember choosing to ignore anything. I was referring to the way that Wind Waker was received in NA post-release, where there was enough negative hype that Nintendo actually changed their plans of the next console Zelda bearing the same art style and being a direct sequel to Wind Waker, and decided against including Tingle after finding out how much people hated him in the US. Its true that Yamauchi didn't have much of a reaction to the initial, post-Spaceworld internet backlash, but in late 2001 he probably already had one foot out the door anyway. At any rate, I hardly think I am overstating the effects of the backlash when Eiji Aonuma basically admitted recently that Twilight Princess was made as a response to that.
Quotes from David Sheff's Game Over posted earlier in this thread:
According to
Hardcore Gaming 101's review of Game Over (and others I've read that I can't be bothered to look up now) the book is "riddled with factual errors".
Wikipedia cites the much more recent (but also highly reviewed)
The Ultimate History of Video Games: The Story behind the Craze that Touched Our Lives and Changed the World by Steven Kent as saying:
The game was sent to Nintendo of America for testing. The sales manager hated it for being too different from the maze and shooter games common at the time,[46] and Judy and Lincoln expressed reservations over the strange title. Still, Arakawa swore that it would be big
Point is, Game Over isn't the end-all and be-all of Donkey Kong historical accounts, and David Sheff's credibility in that book has been called into question before.
EDIT: I really don't like the look of this, flooding a page that's about the mourning of Nintendo's former CEO with unrelated arguments about Zelda. Please PM me if you wish to continue this.