Omg, yes! That image looks so cool! Probably, the best example for a Paper Zelda! Did you make that? Or did you find it on the internet? Is there more of this? I want to see more!
So, yeah, I could definitely see this happening! This is definitely something Nintendo would do! I'd love this happen!
Also, if this game were made, would there be a chance it could fit in the timeline. Nintendo has pulled of fitting in many games with different artstyles into timeline before, so don't see why not.
And, if not a true Paper Zelda, they could always make a game involves paper in some way where Link has to be able to turn into Paper Link to reach place could normally reach. The Paper Link mechanics could work like Painting Link from ALBW except with other capabilities like Paper Airplane mode, Paper Boat mode, and Just a normal Picture Mode (for stealth purposes). Paper Link will obviously be in the Paper Mario type style of course. And the game could be a sequel to ALBW, after both ALBW and TFH in a new generation of Link and Zelda before TLoZ/TAoL.The focus villain could be a new incarnation of Yuga who has power to turn things into paper this time. The game will also feature a rival villain who happens to be the HMS followed by a corrupt Ravio (for certain reasons that I'll explain later in a new theory that has come to mind). HMS plots to resurrect Ganon to overthrow Yuga, helping Ganon reclaim is rightful place as the Demon King. HMS succeeds, Ganon is resurrected fully and obliterates Yuga into pieces. Hilda's successor plays the same kind of role Ravio played in ALBW, where she is in disguise, and unlike Ravio, she goes by alias and pretends to be the opposite of that which actually is. In her disguised form, she wears a black cloak, a dark purple tunic (with grey under tights, blue gloves, and yellow boots and her female parts covered to make her look like a boy), and a mask that looks similar to the mask of truth except with two eyes instead of one and the eyes are feminine-like with tear shapes under the eyes and no mouth. The game will be called "The Legend of Zelda: A Link within Dimensions".
Imagine this being the concept for the next handheld Zelda game! Wouldn't this be a cool game? The game could explain how come Ganon is back in TLoZ and no Yuga. And it could also explain how and why TFH happened directly after ALBW with the same Link.