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Voltaire hit the nail on the head. Technically stuff doesn't run directly off of the SD card, it's copied over to the Wii's internal memory on a temporary manner. As a result you'd never be able to run anything off of the SD card that was more then 512mb(minus whatever space you've taken up already).

As such, we won't be able to download some demo that's 2 gigs and run it because it's still too big to run off the internal Wii memory. Even game updates don't seem all that likely because again, nothing is actually running off the SD card, so any sizeable update would run into space issues again.

Really, what this update seems primarily for is for running Channels, and VC and WiiWare games 'off of' the SD card, though again you'll need to keep some free space on the Wii for this to even work.

I suspect that the SD port is either not fast enough to run games directly off it, or was simply never designed to operate in this manner in conjunction with the various pieces of Wii hardware(video card, cpu, ethernet card, etc.)

Kudos to Nintendo for listening to user complaints and doing something about it, but I highly suspect that short of releasing a Wii HDD that operates through the USB 2 ports(if that is even possible) this is the best solution we're going to get given the current hardware.

The only teeth strong enough to eat other teeth.