The graphics aren't bad, but you can tell everything is still very early in development. The game engine demo High Voltage released showed the immense detail that shadows will have with it. Obviously, the engine is not fully utilized in these early gameplay shots. Obviosly, a lot of work still has to be done.
However, I generally agree on the idea that, despite the Wii's relative power, we are far beyond the day of flat circles on the ground representing shadows. The only place they should still be allowed is on the DS because it's graphics power is roughly equivalent to a polished N64 (better in most cases).
I think these screenshots were just released to show the direction the company is taking with their hardcore Wii effort. It's stupid to sell it so short so easily.
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