I've heard this rumor on wiiudaily, nintendolife, gamefaqs, etc, and while none of them seem like a credible whistle blower, the possibility rather scares me, epecially since their work on Mario Kart 7 does set a precedent for it.

Retro is one of the most talented developers in the world in my view; and they have a very different vibe to other Nintendo teams, allowing them to do things you'd never see from, say, Tokyo and Kyoto EAD, like Metroid Prime.

To waste that on something any of Nintendo's studios could easily make would be more disappointing than Resident Evil 5 and Metroid Other M put together for me.

Not to mention Nintendo desperately needs a visually stunning "core" game like Prime on Wii U, which Retro would be perfect for.

I wouldn't mind Retro "paring up" with one of Nintendo's EAD Studios (Ala Mario Kart 7) on Mario Kart U, but I agree on the fact that Nintendo should put their talent on larger projects that need more artistic aspects and more story telling. This fits Retro's agenda more, I would think.

I think it will take something of a Zelda caliber game for people to take interest in the Wii U. Although games like Mario and Metroid wold definitely help it. Heck maybe they can get square to put a exclusive Final Fantasy game on the Wii U. Ok I'm getting a little off subject OT this would be disappointing to have Retro working on Mario Kart U when any of their other studios could do that game easily.

This is as bad as that StarFox/Metroid cross over rumour.

Bad as in unlikely, or unappealing?

I think Retro is working on two to three titles as well as an engine for the WiiU. So if Mario Kart U is one of the titles, i'm fine with that.

If it's true, it's probably just a small team working on MK U (mostly just helping). The core team is definitely working on something huge. If not then I will hate Nintendo forever (probably not but you get the point).

That would make very little sense indeed.

Both.

If they're split into multiple teams I wouldn't mind some of them workng on Kart U, but if that's their big mystery project I will probably cry.