Super Mario Kart was pretty inclusive. It sold nine million damned copies and was loved by everyone.
Losing is not an exclusionary concept. The losers are part of the game too. What's been excluded is skill.
OK, so I only played a little of Mario Kart 64 back when it was released.
So, just to clarify, you are saying that MK64 (and others to follow), was ruined by attempts to "level the playing field" between skilled vs. non-skilled players:
(0) first place cannot gain as significant a lead since 1st place is artificially handicapped/slowed-down
(1) wider tracks (easier for non-skilled)
(2) power-ups are too powerful, especially in the hands of idiots (blue shell, for example, allows non-skilled to knock out first place, etc.)
Just to play devil's advocate, you could argue that the skilled player simply has MORE challenges, but these are actually NOT "increased driving skill" (as you would expect from a pure racing game), but CHALLENGES have shifted away from pure driving skills to STRATEGY/TACTICS for dealing with BLUE SHELL, and TRIPLE-SHELLS, and RIDING THE BULLET and SQUID INK OBSTRUCTING VIEW and SQUASHING OPPONENTS and LIGHTNING STORM...
I would say that, in the interest of making the game more enjoyable as a "multi-player experience" or a "party game", the emphasis has shifted away from pure driving skill (which, let's be honest, can be incredibly boring when (a) you suck and (b) folks are lapping you and (3) OUTCOMES ARE ENTIRELY TOO PREDICTABLE).
I guess, based on what you said, MarioKart64 represented the shift to "making the game less predictable" by allowing players to F*CK with one another, which, I submit, makes the game better and more enjoyable as a RACE + CRASH DERBY...
I agree, however, that Nintendo should have, at the very least, offered folks the option to turn on/turn off different rules/conditions/power-ups (so, for example, you would never deal with the blue shell if you didn't want to).
The problem, of course, is that this sort of granularity would complicate on-line racing (since only folks who chose your exact same configuration would be eligible for a race)...but, really, as long as a game allowed you to save different "profiles", you would not have to constantly fiddle around with the customization options.

Mario Kart does not have to be a "pure racing simulation"...it has lessened pure driving skill requirements and introduced the need to strategize for all the different things your opponents can do to you...in fact, I will submit that COMBATTING THE BLUE SHELL is fun when there are more ways to counteract it (I have played Wii version a lot and there are a bunch of ways, some require crazy timing skills, to defeat blue shell). I honestly can't remember how to defeat blue shell in MK64, or if it is a feasible strategy vs. pure luck.
I'm fine with this, because I think Mario Kart's
raison d'ĂȘtre is different than that of Gran Tourismo

...
BUT NINTENDO SHOULD STOP BEING LAZY and offer granular customization for folks! I don't really disagree with your critique...I would love to be able to customize the game.