Anyway, according to a post on their website the Wii is in fact capable of High Definition graphics. It's just hidden. Or something. The original article states:
It is amazing what you can get out of a drunk Nintendo executive. Who would have thought Nintendo knows anything about CPUs and GPUs?
The bit I got the other day was that the Wii GPU has full hi-def capabilities even if they are not exposed.
The reason you don't see it is twofold, the fact that the console can't really push HD rez at reasonable frame rates and the fact that it would cost more. The latter will probably become a moot point with the first Wii refresh but the former problem is really here to stay.
What it comes down to is that the Wii may be the best console out there, but don't look for 1920 * 1080 games pushing full rez. If anything, SD or maybe widescreen upscaled is about all you will see, but for me, I just want HDMI outs.
So basically what The Inquirer are trying to say is that the Wii can push out 1080p - but it will be plagued with frame rate issues.
According to other sites that have looked into this rumour the console should be able to deal with 720p no problem - which isn't much of a surprise seeing as a lot of original XBOX games ran in this resolution.