Well i think if it was tough to sell HD over SD with the Wii, it'll be much harder to sell true HD over normal "HD" next gen. This is the point that OP is making.
I also think nobody has any idea what will ultimately win out next generation, apart from well known factors such as lower price and game library.
Was it motion controls? Was it online infrastructure? Was it price? Was it buying up exclusives? It was one of these, and all of these, at some point that gave Wii or the 360 an edge.
“When we make some new announcement and if there is no positive initial reaction from the market, I try to think of it as a good sign because that can be interpreted as people reacting to something groundbreaking. ...if the employees were always minding themselves to do whatever the market is requiring at any moment, and if they were always focusing on something we can sell right now for the short term, it would be very limiting. We are trying to think outside the box.” - Satoru Iwata - This is why corporate multinationals will never truly understand, or risk doing, what Nintendo does.
