The definition of the output is mostly irrelevant, with regards to art. If you want a good looking Wii game, you still have to work with the engine to create well-crafted models, with technically sound (and attractive) texture work. Technically sound artists cost about 150% as much as your average joe artist does -- and that's where the "Wii is cheaper" to develop good games argument falls flat on its face. It may be moderately cheaper, but it's not a significant as some would like to believe.
If you want consistantly good games, you need consistantly good art. The size of the texture, etc. is immaterial. Textures are not hand-crafted, pixel-by-pixel, or if that was necessary, it'd be on the Wii, not the HD consoles. The reason "art is cheap" on Wii games, is due to the fact that they don't go out of their way to make good art, or hire good artists. It has nothing to do with the console. It has everything to do with their perceived audience, and their project's goals and budget.
Publishers need to spend more money on individual Wii projects, not more money on more Wii projects.
