This sounds like a pretty good way to handle the problem, although I'd prefer if it asked me what I want to delete before going ahead and guessing which game I won't be needing. Both ways should be possible to implement with software updates.
It's only a matter of time before we get a hard drive though. I know they just denied it, but which do you think is more likely: Nintendo having us redownload stuff constantly and put stress on their server (N looses money), or releasing a ridiculously expensive 2-10GB hard drive that's of course the only one that's compatible and charge us an arm and a leg for it (N makes money)? In the best case scenario they'd let us use our existing hard drives, but I'm not too optimistic about that.
With all the Wii Ware stuff and DS demos they're going to be offering, I simply cannot see them not offering us a hard drive. It'd be an incredibly stupid move from a company that's been doing everything right for the last two years or so.
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