Technically there are ways to work around the Wii hardware limitations, for example Nintendo could release an upgrade to the Wii using something similar to this:
- External Processor
- External Video
- Extra ram in the external box (Probably 256MB)
- Use the Wii to read data from the disc/SD Card/Internal storage and deliver it to the external box Via USB
- External box processes the video and data, sends an HD video back to the Wii's GPU to decode and display. (on the second USB port to not interfere with traffic on the receiving port)
- The Wii's GPU can support 720p and 1080i video's
If Nintendo went down this route, it wouldn't be the first time Nintendo did something like this. I think it would be very possible for Nintendo to do right now IF they wanted to. It would explain a lot of the rumors coming out at the moment. No new Wii or DS, just a Wii upgrade. How likely do I think Nintendo would do this? 50/50 chance. No higher then any other crazy idea anyone else has come up with already. Just a few thoughts I thought I'd throw out there. Nintendo would need really cheap parts to pull this off, so don't expect NEXT GEN, this gen.
Prepare for termination! It is the only logical thing to do, for I am only loyal to Megatron.