The issue was not about it "only working in docked", but the problems around how it would work as you undock/dock it without interruptions, without corrupting data, etc.Damn..I wasn't expecting this! And this solves the issue of only working in docked mode. Good stuff.
Plugged directly as pictured, how would you dock it while playing a game? Then undock it if you have to go?
In theory you could quit the game, unplug everything, then plug it back and start again. But then, they would need to add constant prompts on screen to remind people to do so, to avoid any damages. The player would need to create save states before quitting the game as suspend would be useless.