Actually, watching native SD video of any sort tends to look more muddied on HDTVs than on native SDTVs. This is likely due more to the difference in observable quality between CRTs (which most SDTVs are) and LCD/Plasma/some other digital projection (which most HDTVs are).
For instance, you can see significantly more detail from a regular DVD on an LCD computer monitor, including all the blocking and artifacting, but displayed on a regular CRT television it looks unquestionably more vibrant.
I'd say if you have a sizeable SD-CRT television lying around (and who doesn't), and better yet, if it has 100-120Hz refresh rate (the more recent ones do), then try the Wii on it, and you might be suprised.
Edit:
Of course there's no contesting shader effects and effects density, even accounting for the resolution. Something doesn't necessarily look less photo-real because it's not in HD. For instance, you wouldn't mistake news anchors for being animatronic faxcimilies because you're watching the news on an SDTV. The difference is analogous to the PS3 being able to render people, while the Wii could only say render wax-works. Of course it might not matter if the wax work is wearing a more interesting costume and pulling a funny face. Entertainment is entertainment.