If the Zelda team really felt the pressure from MonsterHunter we can expect to see an even better looking Zelda title. Capcom has always pushed the Nintendo hardware harder then other third parties. Just look at the best graphic's on the GameCube (ResidentEvil4) However if the Zelda team was actually aware of what Capcom was doing they must be working very hard to show them up.
Nintendo has always been very competitive with its third party supporters, rarely ever allowing a third party to out do or over perform when compared to a first party title. I have no doubt that the next LOZ will look as good as MonsterHunter3 if not a tad better. Nintendo has alot at stake in Zelda.
Also Nintendo's choice to bundle a third party game with their console is a big step. I can't recal the last time I saw a third party game bundled with Nintendo hardware? Infact I'm not sure I remember ever seeing a Nintendo console bundled with third party software, has it ever happened?
-JC7
"In God We Trust - In Games We Play " - Joel Reimer
