You know, I think the problem with Colosseum and XD was the formula. You catch Shadow Pokemon, purify them, and... well, that's it. No wild pokemon (rarely in XD, but not the point), no gyms, no elite four, and no big pokedex.
I think the developers were just stupid in the first place to alter our beloved franchise's core gaming experience. If they kept the core and ADDED in shadow pokemon, I can see a success. But no. Every new generation of games added new things to do while keeping the core experience; the console games failed to emulate this.
THAT is why they failed, IMO. I suppose it'd certainly be possible for a console game to work if they just stuck to the tried and true, with just a few new innovations.
Another thing to think about, is how will moving about work? I think grass patches should still exist, but you still move on a completely 3D axis; and rather than moving through square patches does a pokemon encounter occur, but depending on how far you move will depend when (and if) a wild pokemon shows up.