First of all, they can't just 'get' current-gen graphics without releasing a completely new system. That would be a monumentally stupid move.
However, with any luck, Conduit will sell well, its' engine will be licensed out, and others like it will be made. From the tech demo, it seems like Wii is in fact capable of churning out very respectable 'realistic' graphics. I know I would buy as many of these types of games as I could .
Second, I don't mean to be rude, but what hole have you been living in? In addition to WoW's graphs (awesome, btw ), third parties have some monster games coming out, many of the multiplats of which are actually getting some thought now.
-Conduit
-Star Wars Force Unleashed (with exclusive multiplayer)
-Fatal Frame IV
-Monster Hunter
-Alone in the Dark
-Street Fighter
-DC vs. MK, Hulk
-Iron Man
-Spider-Man
-Rock Band
-Guitar Hero 4 and Aerosmith
-the Harry Potter games are being focussed around Wii now
-Boom Blox
-Earthworm Jim
-lots of more casual games
-Tons of dev. support for Wiiware
Considering that this support was largely lacking in the first year, and they still dominated, I'd say Nintendo is in FINE shape Not just that, but you can bet your ass that big third-party games will, along with some heavy-hitting first-party games, dominate E3 this year.