Well, when it comes to KI, I don't know if Rare would've done just as good of a job as Double Helix or Iron Galaxy. I'm not saying there's anything WRONG with giving the right teams the right IPs if Rare won't work on them themselves. It's just that I generally want to see what Rare's current team could do with their IPs and it always kind of peeves me when they outsource them to others. I for sure thought Rare were the ones making Battetoads after all the inside info we got back on GAF, but then when it turned out that it was Dlala Studios, it bothered me a tiny bit (though it's possible the project initially started internally at Rare before moving to Dlala).
And handing off your IPs to other devs isn't always guaranteed to turn out so well. See: Conker's Big Reunion, Young Conker.
By traditional game, do you mean platformer or something? As Remo Williams already pointed out above, Rare has always tried new things, even in their golden days. Them suddenly making an online pirate adventure game out of nowhere isn't that crazy.
I wouldn't be surprised if their next game will be a genre they've never tackled before either.
