The Wii can do 720p but it wouldn't be worth it unless it was something like a CSI game were frame rate and other data can be limited without harming gameplay. However it doesn't have any means of rendering at 720p anyway so it's more theory than anything.
Obviously the graphical fidelity between Wii and X360/PS3 titles will never match. Games like SMG and MP3 show that good art direction and clever programming can blur the fidelity gap to a decent degree but this has been true for decades. Recall how Donkey Kong Country on SNES pushed into 32 bit territory graphically. This wasn't brute power of the SNES but a new rendering technique from Rare.
Consider that on the opposite side of things, a turd rendered in 1080p is still a turd and can be considered graphically inferior to last gen games that had great art direction.
The rEVOLution is not being televised
