Already mentioned it plenty of times.

Nintendo hasn't set an official price for Europe. If the WiiU isn't selling well retailers can lower the price as they wish. On the other hand if the console is having shipment issues due to good sales (as it happened during launch with the Premium SKU) retailers can raise the price again by a lot.

Now I'm not sure how that works when retailers order Wii Us from Nintendo. The only logic way I can think of is that Nintendo is getting a fixed percentage AFTER a console has been sold to a customer.
Since we know that Nintendo is losing some money from the consoles the profit margin for retailers can't be more than £100 for the Basic SKU and I don't think retailers would sell a new item (that needs to be in stock for the following years) at such low costs.

I feel like another thing to point out is that in the UK, the price for the basic version when converted to USD is almost $40 more than the DELUXE bundle here and the UK Deluxe version is $115 more. It is kind of like when Sony dropped the price of the Vita in Japan to bring it in line with what the rest of the world was paying....even though this isn't an official drop.

I always got the impression that companies were paid by the retailers when they bought systems at a discount, that would account for the "loss on each system sold" stuff. This would also explain why they always report in units shipped rather than actually sold. It would mean that they have already gotten the money from each system. The retailers sending a check to Nintendo/Sony/MS after systems have sold seems a bit weird to me. Sell through would be important because if customers aren't buying, Nintendo/Sony/MS wouldn't have anywhere to ship, so THEN they wouldn't make more money.

I'm not from the UK or even Europe....so is this kind of thing normal? Not the price drop, but the exchange rate making things more expensive comparatively? Of course....if my entire post is completely wrong, just let me know, haha. 

I don't know what "here" is, but comparing the prices in the OP with Gamestop or Walmart (since you used USD) the UK deals are much cheaper and not more expensive.
Many electronic related products are more expensive in Europe compared to the US, but the WiiU is a different case.

WiiU Basic (Walmart/Gamestop): $300
WiiU Basic (UK offer): $233

WiiU Deluxe (Walmart/Gamestop): $350
WiiU Deluxe (UK offer): $311

Now the thing is that European offers always include VAT, while US offers don't (since every state has its own tax rate).
So to make the comparison fair you'd need to reduce the UK offers by 20%.

WiiU Basic (Walmart/Gamestop): $300
WiiU Basic (UK offer): $188

WiiU Deluxe (Walmart/Gamestop): $350
WiiU Deluxe (UK offer): $249

I meant before the deal was implemented, I think I meant to say "was almost $40 more " instead of "is almost $40 more." My bad. In the OP he lists the RRP as £249.99 and £299.99 respectively.

I get that the price cut made it cheaper, but didn't know about the VAT. Thanks for clearing that up.