Yeah that seems to be why they're updating the internals of the Switch for now, most likely to a 16nm finfet SOC. But that doesn't mean it will get a major performance upgrade so it's best to limit your expectations.
In the meanwhile the games that are set to be released like Pokemon Sword and Shield and BOTW2 and Animal Crossing will sell tens of millions of current gen Switch and Switch Lite units, so Nintendo aren't feeling a lot of pressure to 'keep up with the times'.
But when they updated the 3ds they did advertise it as a new model.
https://www.nintendo.com/3ds/features/compare/
They even made some games like Xenoblade incompatible with the older model. I think if they came out with a Switch model that had let's say 1080p screen and power equivalent to Xbox One S or PS4 levels, they will certainly brand it.
Emulators need a lot of power to run, many more times than the source hardware.