My take is this.. The raw power of the hardware MAY be similar to the HD consoles, but the fact that you need the power to create the image twice to create a 3D image, could mean the the graphics don't translate to HD console graphics. This is unless you have a 3DS game that doesn't use 3D.
So for all we know, even if the power IS close to the HD consoles, which is a definite possibilty, the graphics could still be all over the place. They could be anywhere from slightly better than DS, to equivilant to the HD consoles. It just depends on how much extra power is needed to create another layer of images.
I personally see the graphics being somewhere in the Dreamcast region.







