Regardless of which DKC series you prefer, as they're both phenomenal (I personally prefer aspects of both but favor Retro's when it comes to gameplay), Nintendo buying back Rare wouldn't be that smart of a move, and it probably wouldn't result in any sort of renaissance in the DK series or any other series. The original talent at Rare - those who made DKC, Banjo-Kazooie, and the like - are no longer with the company (well, Gregg Mayles is still there, I think). The current Rare is Rare in name only. One may enjoy their current output, but that doesn't mean they'd suddenly "revive" Donkey Kong or Banjo if they returned to Nintendo. They'd probably be working on far different projects. Nintendo knows that guys like Tim and Chris Stamper are no longer with Rare, which is why they made the smarter decision of putting Retro to work on the DKC revival instead.
I'd love to see Nintendo hire the bulk of ex-Rare employees and take them into their development house, however. That's what making great games is all about. It's about the designers, writers, programmers, and directors, not the company itself.