He's referring to Blue Dragon and Lost Odyssey with that quote...(1) I don't think Sakaguchi means anything in particular with the words "next-gen" in this case other than the graphics... and I think that's his main point actually. So he's trying to do a lot of things to reinvent the genre on the Wii, which is less of a risk financially precisely because Wii is not "next-gen" so to speak.(2)

Personally, I couldn't be happier! This part in particular has me excited:

"Each battlefield has a lot of exploitable features, and the system itself is versatile enough to allow players a lot of leeway. We made it so players can often come up with some novel way of winning a battle and think to themselves 'Wow, I'm a genius!'"

Bring on the localization!

1. What made you think I didn't know that?

2. No, he referred to making a next gen RPG for this game, and since it's on the Wii, that logically follows that he thinks it's next-gen.

He's talking about making dramatic changes to the formula of a JRPG in order to evolve the genre, even if it means not all of his new ideas may be successful or well received. To me that's the very definition of a "next-gen" JRPG.

What he's not claiming however is to have the perfect formula nailed down for such an experience. That's why the Wii seems to make sense as a platform; besides the huge user base, the lower development cost makes such a project more viable. The main difference between this kind of "experiment" and others which have failed on the Wii is that for once it seems the man behind the project is sincerely passionate about his ideas and is determined to ship a polished AAA experience.

The fact that this approach is so refreshing just goes to show how many developers and publishers have misused or misunderstood the concept of the Wii to begin with... and instead of treating it's "last-gen" graphics as an opportunity to explore other areas in gaming at a lower risk, prefer to lose millions of dollars on "proven concepts" on more expensive platforms...