If this is the only reason Nintendo's delaying Twilight Princess, maybe the Revolution's in deeper trouble than they'd care to admit.
Looking at the current specs for it, it's basically "not that much more powerful than an Xbox." While yes, granted, everything doesn't need to be super hyper graphic realistic to be fun... loss of state of the art graphics does not automatically mean added fun. And pretty graphics doesn't mean automatically LESS fun (PGR3 etc.)
The Revolution's already outdated hardware-wise, and it's probably a year before launch. Developers wanting to port their games to the Rev are going to be taking the same backward steps a company would have had to do porting an Xbox game to the original Playstation. It's THAT much of a difference. And I know, I know, Nintendo consoles don't NEED multiplatform titles to be great, but like it or not those titles generally sell the most and bring in a huge chunk of revenue. They're being cheap just to be cheap and if the console doesn't launch at around $99 you're getting ripped off.
Back to the specs. 128MB of RAM? Everything about the new console generation is about bigger. More space, more room to do things. Then you go to the Nintendo titles and it's small rooms connected to more small rooms. The way they're going you'll be getting the same size levels you got in Mario 64 and Mario Sunshine. Which, again, makes new game titles for the Rev worthwhile only at a $30 or cheaper price point. Maybe $20.
Also, no HD. Not a terribly big deal right NOW but next year more people will be adopting. And more after that. I've seen figures that say over half of America's households will have HD sets by 2007-2008 and 65%+ by 2010. Go look at a non-HD game on an HDTV. It looks like shit even compared to what it looks like on SD. Supporting 480i or whatever the lowest HD standard is would barely make a dent in their hardware costs and it would make developers a LOT happier. Ignoring HD support = another dev bottleneck for ports/new games. Not only are developers going to be forced to work with the lesser hardware, they're also going to work with Nintendo's forced innovation with the new controller (which, imo, shuts as many doors as it opens.) I honestly think HD in this generation is last gen's "Gamers don't want to go online" spiel Nintendo was saying in 2001-2 and their "We don't need to use optical media, cartridges are just fine" N64 line in the mid-late 90's.
Also I'm really suprised Nintendo has said NOTHING about Back Catalog. It's one of the most important parts of the system, I feel. Yet they haven't said a word about how it'll work, how much games will cost, what libraries will be available, and so on. And then I go look at Xbox Live Arcade - old games, sure, but more importantly NEW, FRESH games available for download and play online for cheap. Most of them $5-10. There's already a huge list of developers making content for Arcade, not to mention an amateur developer (or college class/team) can go buy a Microsoft engine license for about $100-150, make their game and export it to Xbox and the Arcade all at once.
People are going to buy the Revolution and Nintendo will make money on the venture because people will buy and Nintendo profits off even the stupid shit they make (hell, the E-Reader turned a profit.) But in the end it's going to be just like the Gamecube was - the third-place console, built from the ground up for kids, budget gamers, and those who can't live without the 2-4 AAA titles Nintendo makes a year.
And without fail, these are the kind of things I hear from hardcore Revolution supporters when I've brought up these and similar points to why I'm wary about the Rev:
"Those system specs sure seem low"
"Them being low is an advantage and I love Nintendo for it!!!"
"It sure seems to be coming out later than any other console"
"Coming out later is perfect! I love Nintendo!!!"
"It's not supporting HD, unlike everyone else"
"Suppoting HD is stupid. Thank god Nintendo isn't doing it!"
"Looks like you'll be lacking 3rd party ports!"
"I KNOW! Isn't that AWESOME!!!"
