I really hope Ubisoft does do a sequel. I LOVE the first one. I finished that bad boy last night and I'm going through it again.
Even though it's not quite as polished in some areas as we had hoped, Red Steel kicks some serious ass! I can't believe the level of precision and accuracy that is available at your finger tips. Absolutely unprecendented. You truly do have a level of control that wasn't possible before. I'm absolutely loving it, lol. It still would have been nice if Ubi allowed us to adjust the size of the bounding box and turning speed/acceleration. Never the less, the game is awesome.
Online multiplayer is a no-brainer for the sequel. In fact, Ubi originally wanted to implement it, but Nintendo didn't have the online tools ready and the Wi-Fi service was still being finalized/tweaked.
I think Wii is going to REALLY start shining with the next generation of games coming out for it. Developers will be much more familiar with the system/remote/tools and they'll have had access to final dev kits from the get go. It still all depends on how much effort they put into utilizing Wii, though. Most games that are coming out this holiday season have had a development time of only about a year and final dev kits didn't get finalized and sent out until only about 3-4 months ago.
On a side note, Twilight Princess is mind blowing. Incredibly epic, amazing controls and a gorgeous presentation. Definately THE game to own this holiday.
Chance favors the prepared mind.