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They could as well have gone with a really improved older one. Seems to be no problem to port from G5 to Espresso.
But (not existing) SIMD capabilities, weak FPU etc. are a problem.

Keep in mind that Intels Core and to some degree Core 2 architecture basically was an (very) improved P6 architecture chip. Thats hypothetic though because it seems that Nintendo went for a really cheap design. The MCM is what makes the CPU+GPU part expensive.

A PPC750 based CPU with the right enhancements might have done very well.