"After 2008 Nintendo stopped releasing the kinds of games that they did in 2007 and 2008."
That's the funniest statement in the whole topic to me. You basically spent the whole introduction pointing out how the games Nintendo was releasing in '09-'12 were exactly the same as the ones that came before.
What games did Nintendo release in 2007? Hm, Mario Galaxy, Mario Party 8, Super Paper Mario, Big Brain Academy Wii Degree, WarioWare Smooth Moves ('07 NA & EU release), Mario Strikers Charged, Metroid Prime 3, Link's Crossbow Training, Wii Play ('07 in NA)... compare to Mario Galaxy 2, Mario Party 9, Wii Party, Fortune Street, Rhythm Heaven Fever, New Super Mario Bros, Mario Sports Mix, Metroid Other M, Wii Fit Plus, Wii Play Motion, etc.
How about 2008? Mario Kart Wii, Brawl, Animal Crossing, Wii Music (!), Wii Fit, Wario Land Shake It, Endless Ocean... am I missing something here? That's not a lot of games. The only big ones there are Kart and Brawl. Fit --> Fit Plus, Wario Land is like an amalgamation of NSMB and WarioWare, Endless Ocean --> Endless Ocean 2.
Hardware sales may have dropped in '09 and '10, but that's normal for a console 4-5 years into its lifespan, especially for a console that sold so well so quickly. The Wii peaked in '08; the PS2 peaked in '02; the GBA and GameCube peaked in '03, the XBox in '04. The thing is, even after dropping for two years, Wii hardware sales in '10 were greater than they were in '07 -- and Wii software peaked in '10. 2010 may have been the Wii's best year.
The proof is in the fact that you had to casually dismiss a lot of great games to make your list work. 2011 was the only truly weak year for first-party Wii software.
And you should play more of Xenoblade. There are some cutscenes and stuff, especially about halfway through the game, but there is a LOT of gameplay between them. You can play for hours and not watch a single cutscene, then get a couple of 5 minute ones in a row, then back to hours of no cutscenes. It depends on how you play the game, too.