A developer has become sick of publishers being wary of big budget games on the Wii (as though Twilight Princess was a bargain, even if it was made for the GC). So they are doing something about it.
Yet they aren't just making a high graphics game (even if it can't match the HD systems). They are also working on an engine to get the best effects from the Wii, with minimal coding. And they are willing to license it. Just see the video in the article.
It's just a tech demo for the engine, so of course the polygons and texturing will be really low.
Some tech demos for the Crytech 2 engine just showed off the physics and the effects. It gave little indication of how incredible Crysis would actually look. So don't take this demo as a demonstration of the Wii's limits. It's a demonstration of the potential that is untapped.
EDIT: I guess this will fly over a lot of your heads if you don't understand the importance of these effects. The thing is that it was believed the Wii either had too little memory to do all this at once, or that if it could, it would take too much time and effort. This engine solves both those issues.