The following rumour sounds about right, considering how Nintendo operates…

• 720p appears to be the ‘sweet spot’ for the definition of games running intensive visuals on the Wii U controller
• Wii U controller can handle 480p (Considering the 6.2″ screen, this may not look that different from what you see on TV)
• Wii U controller can be used for viewing of on-TV action from a different angle in games
• There are some third party games using this for a game play advantage
• V5 dev kit is more powerful than V4, but doesn’t allow for 1080p in these kind of situations
• Games will benefit from a slight visual boost over current-gen HD systems and may run at a higher resolution
• Simpler titles may be able to run 1080p in conjunction with the controller

the original source for this is from GAF
So I guess if this information is true, thanks to the tablet controller, the jump really won't be that significant compared to what's offered this gen

I'm not sure what to feel about this. The controller's resolution is fine, but I was hoping for true 1080-ness.

I saw this earlier and my impression is that it goes against what Nintendo said at E3. They stated it should have 1080p with 30 or 60fps.

Now if that means 720p to get stable 60fps or 1080p for 30fps average.... well I can see that and it is still a solid upgrade from PS360 where its all 720p at 30fps or less.

Also, it states 720p when using the controller screen... so with out that its probably solid 1080p.

The controller is also potentially off as they've always said it will be HD and 480p is not HD. But in reality, it would be fine for a 6" screen.

Considering recent rumors state they actually upgraded the system some so it will be compatible with Unreal Engine 4... idk if this rumor is perfect. But, it is believable.

Expected stuff I say, and good stuff at that.

Meh, I wanted 1080p and I was sure Reggie said that they would give us full 1080p HD unlike "competitors." Too bad I guess, hopefully the graphics will make up for the resolution.

its pretty much saying if the controller is being used intensely then the Resolution will be 720p If its just controlling the game then by all means it can be 1080p

Wii U is going to be amazing, it probably will bring me back to consoles after a long sabathical time.

The more I think, the more new possibilities for the controller appear - like this alternate camera in games. Or marking things in metroid maps...

According to the rumour, it depends on how the tablet is used. In a game where the tablet is used intensively (as in a different view of the game with all the in game effects used) then the TV view will "just" look better than the port. On the other hand if it's used just as a map/hub, then much more can be done.

Here's what the guy who is the originator of the rumour also had to say:

My yesterday post IS NOT a metric evaluation of the Wii U capacities, it can't be treated as that, i thought i made myself perfectly clear with how much i stressed on the specific context. It's just an information about how some third-parties, with particular titles (ports), with a certain approach of the padlet (intricate), with a dev kit (v4), in a certain step of development (far from being polished visually so it'll look even better in the end) + other parameters, handle the Wii U hardware. And still, it's rather impressive, some techies explained how rendering a complex scene on a 480p screen is taxing, and this is IN ADDITION to a graphically ambitious content displayed in a solid 720p on the main screen, nicer than its current gen hd counterpart. Nothing to be disappointed of, really, except if some gafers were in the "1080p for every titles at launch" camp.

it will still play 1080p i believe its just for the times the controller is used in game intensely it will be shown at 720p. assuming these points are in fact true