What Iwata (and later Sony) rejected was the prototype. Of course there is likely to be some issues...
But, on THE OTHER HAND, let us never forget how crappy Microsoft products tend to be. You know how Windows is so plagued with problems and always has been? How Internet Exploder is the most unsecure browser there is? And how could any of us possibly forget the red rings of death on the 360.
So, considering MS's past record of shoddy fail-ridden products, is it at all unreasonable for one to be suspicious? Nintendo is well known for making quality products, so if they've turned something down you know it was probably for a good reason. Sony also turned it down. But then Microsoft, a company known for making software that crashes and consoles that burn in red rings of fire, embraces this.
So, I think that says it all folks.