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One thing about WiiHD:

Nintendo always was top of the bill, technically.
SNES>Mega Drive
N64>>>>>PS1
Gamecube>>PS2 and in some ways beat the Xbox

Wii is a way to break out of the competition, which was necessary since Nintendo lost it a bit last gen, but I'm quite sure that Nintendo wants to have the best console, so that means also in horsepower. Especially with the enormous amount of money they're making they can develop a brilliant machine when the mass market is ready for HD.