Sorry for the tangent ppl :P.
IMO there's no pixelation....and I can't find a single credible opinion/review (not just some person) to support that there is obvious pixelation. Maybe my google skills suck.
Exactly how did you test for pixelation: which display & size, viewing distance, in what conditions, which components, cables, etc? For me cable SD through s-video/Tivo S2 is excellent, and DVD (Panasonic s27) through component is great as well. All from ~6' away. No cable HD comparison since I'm waiting for the Tivo S3 to drop in price .
Anyways, it seems like you're set on your opinion...at least we can agree that the Wii is tons o' fun.