In terms of pixels per inch this resolution at that screen size is close to the iPad Air (traditional middle iPad size with "retina" display). It's absolutely fine, and IPS LCD will look great compared to the screens Nintendo has used on all their past hardware!
Capacitive multi touch, about time. Knowing that from the off there's no reason developers can't smartly design games to accommodate console controls or take advantage of touch if suitable when used in portable mode. I'm down on Nintendo rather a lot but I like the sound of everything I'm hearing.
If you're chasing absolute cutting edge graphics then expecting that from Nintendo at this stage of the game is a fools errand. Finally though we get ALL Nintendos games and their special third party exclusives, and more, on ONE system. One system that can be used on your tv with a big comfy traditional controller, or used in bed or on the go to play exactly the same games. I love it. Price will be key and I might just get one (might even come before I get myself a Pro if I'm honest).