". Games haven't been programmed to run in 720p, let alone 1080p"
That dosnt actualy mater that much.
PC graphic cards can force higher resolutions then games are designed for.
Anything 3D can be rendered at any res.
The problem is any raster overlays.
"
So either it could be a feature of a Wii 2.0 - or a firmware update, but the Wii can't read HD discs, so then only downloadble games in theory could be HD. In short, unlikely!"
Discs have nothing to do with it.
The Xbox360 uses the same format DVD's as Wii does.
"That firmware Xploder disc kills the PS2, though. It's not viable to run say, San Andreas on PS2 at 768p when it was already pushing it at 480i. Same goes for Wii. If you tried to run Mario Galaxy at HD, the machine would grind to a halt."
Exactly.
For a finite amount of system power, you can have only a certain amount of polygons per second rendered to the screen.
You want HD forced?
Fine.
You will get less framerate.