This article states that "According to this article on the site, Mozlapunk has recently spoken to a "reliable source" who claims that Nintendo's Wii console will be capable of displaying graphics that "will be visually on par with the Xbox 360 and may even exceed it slightly." This certainly has gotten many gamers' tongues wagging, since according to IGN they weren't expecting the console's graphical performance to be any more powerful than a slightly souped up Xbox console."
I have to say, that when I showed the E3 trailer of Red Steel to a friend, the first thing he said was "This is an FMV right?".
As far as I can tell, the graphics for pretty much all of the new Wii games are beautiful, which is why I can believe this happening. I mean, just imagine this major blow to the competition!