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Ok, it all comes down to developers. If you look at the first generation of Wii games, most (but not all) were rushed and look like they invested 5 bucks on porting it from the PS2. FarCry looked like it was done in one hour. When more 'skilled' (not THAT money-driven, like EA, Ubi, R*, etc) start to work on the Wii more seriously, we are likely to see better stuff. Guys like Konami, Factor5 or even Valve (hey, a man can dream). Konami itself is showing some of the stuff with Dewy's Adventure. Nintendo could use the full power of the Wii too, but their artistic style is not that based on graphical technology.

We don't even know if the Hollywood is still using TEVs. TEVs are somewhat similiar to Pixel Shaders. Actually, when (then) ArtX started development of the Flipper, Pixel Shaders were not around yer. ATI could have thrown a newer GPU and keep backwards compatibility (this one could be broken by CPU, not by GPU differences). My guess is that the Wii's GPU is similar to a middle-end Mobility Radeon X1000... at lower speeds obviously to keep the small form factor, but far better than the Flipper.

Also, about the Wii being two GC duck-taped together thing... Microsoft said on their official webpage that the 360 was 4 times more powerful than the Xbox. People say Wii is two to three times more powerful than the GC.
Ok, let's say that 360 is 100% powerful, and let's say that Xbox 1 is 25% powerful (this times 4 = 100). Now, let's say that GC is 20% powerful... now, let's assume the figure of the Wii being 3 times as powerful as the GC... that gives us 60% powerful, compared to Xbox 360... not that abysmal ain't it? I'm not claiming this as fact, I'm just assuming what everyone had said until now.