Development costs are going to go up no matter what Nintendo does. That's just a losing battle.
There isn't some magical dev environment that lets you create a great game with minimal effort. Just doesn't exist.
HD I think is actually helpful in this regard. You can get a very nice image quality (the higher resolution smooths out a lot of those jaggies and muddy textures and creates a very nice clean look) without a lot of fuss. Whereas devs on the Wii have to really push the system and work hard with their art style to get good looking visuals and most in the end don't even bother to try.
That's not a great situation at all IMO.
And yes, once you play a Zelda game that looks like this:
http://i36.tinypic.com/24lk0sn.jpg
You won't ever want to go back. You can call that "speculation", but write it down, take a picture whatever. When you are playing that, the last thing you will be thinking is "gee ... I wish this was fuzzier and blurrier and lower poly and lower budget like my old Wii, those were the good ol' days".
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