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Mr Khan said:

This would be more in line with how i expect the Nintendo-Sony/Microsoft gap to look like in the coming generation, instead of the radical leap between Wii and PS360, you'd have something more like "PC game on recommended settings" vs "PC game on Max settings."

Except consoles utilize hardware resources better than PCs since they are specifically engineered to function synergistcally as game playing devices. Meaning, I would expect to get better performance from say an RV770 in the Wii U than the RV770 used in the HD4850 in a PC build with 8GB RAM and a quad core Intel i7 CPU running at similar clock speeds (not that anyone would build a gaming PC with a 4 year old VGA card). 

Of course expecting "PC game on Max settings" with a console simply isn't realistic since that can require multiple VGA card system builds where the cost of the video cards alone can reach and easily exceed $1000. It's not difficult to spend more on a single VGA card than one would for a console. 

And then there's the fact that the RV770 is a throwback to 2008 GPU technology and the HD6670 rumored in the Xbox 3 is 2010 GPU technology and expectations should be adjusted appropriately regardless of how optimized the hardware is and how well the SDK tools allow developers to maximize the hardware resources at hand.