Inside
Wii HD will probably use a multicore chip designed in partnership with IBM and AMD (who bought out ATI). The CPU and GPU will be integrated into one chip and there will probably be a total of four cores (two for each function). This will allow the Wii HD to maintain complete backwards compatibility -- the system will just turn off the unused cores and lower the clock speed when in Wii mode and will use the extra horsepower when in HD mode. While it would be nice if there was a scaler chip in the system, don't count on cheap Nintendo to include the functionality (i.e. Wii and maybe even GC games get upconverted automatically to 720p and/or 1080p resolution). To support HD, the system will of course run faster and have the additional RAM needed to support that function.
Outside
The system itself will remain largely unchanged, though it will include extra internal storage and an upgraded version of the Wii OS. Unless there's a major breakthrough in HD versus BD wars, Wii HD will continue to use DVDs though many games will be distributed online. The system will look mostly the same, but with a 'modern' twist. Look at Apple products out at the time or what a newly remodeled DS looks like to get design cues. The GC controller and memory card ports will be removed, but you'll be able to use the Classic Controller and internal storage to maintain backwards compatibility.
The Contoller
The updated Wiimote itself will be evolutionary, not revolutionary. Expect some unique twist -- maybe a touch lcd or analogue buttons. If possible, Nintendo may be able to remove the need for the Sensor Bar, using other positions tech to know the location of the device. Device accuracy will be increased and battery life improved.
Numbers are like people. Torture them enough and you can get them to say anything you want.
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