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The only good thing you mentioned about it there was that it would start at retail at 299 and come with BC.

I'm not sure how the difficulty for development really plays this much of a factor because the Wii is probably the most difficult of the platforms to develop an amazing game for (look at their upcoming lineup).

In any case if your idea was real I think PS3 would have gotten destroyed by the Wii in a similar fashion as we see today. It would be ahead of 360 right now but at the HUGE cost of giving you a half assed item. I'm a lot happier with my blu ray and cell.