Ubi was too ambitious for having too little time with actual Wii dev hardware.
Best case scenario: they had 5 months with ACTUAL Wii remotes, from May to early Nov when the game would need to go gold and be printing and shipping, and even that's being generous.
The game scenario needed to be fleshed out to the point where they knew what the player would see, go through, interact with, etc. beforehand. Up until then, everything was being done on PC hardware.
Red Steel isn't like Halo or Geist which both spent 2-5 years in development prior to release (Halo was in the oven a LOOOONG time). At the very best, RS had 13 months time in development, and that's saying they started developing IMMEDIATELY after the Tokyo game show. Then, the aiming and swordfighting mechanics had only 5 months in which to be honed and perfected.
Given these circumstances, I think the same team that gave us PoP and Splinter Cell did the best they could, and despite its flaws, I still enjoyed the game to the point where I'd reserve a sequel right now if one was announced, especially considering that Red Steel 2 would be developed entirely on Wii hardware, with MUCH more time with the Wiimote, and will have access to the WiiConnect24 dev kits which Nintendo decided to withhold from all 3rd parties for some idiotic reason (Pokemon has online play so what gives?).
And I'm glad Red Steel was a launch title because it gave the Wii the extra edge it needed in the west. If I remember correctly, it's the top seller in the US after TP. Despite its flaws, Red Steel went over VERY well with the PS2 crowd, the same group who were quick to label the GC as a toy for children before this. Nintendo (at least Reggie for sure) must have also wanted it for a launch title because Nintendo worked with Ubi to get the game developed and they showed it at E3 as one of the Wii's feature titles, that and Reggie recently defended the game from critics, which is atypical for Nintendo (you don't see them defending Super Monkey Ball).
But the average PS2 fan is likely so used to sh*tty, glitchy games that Red Steel is still awesome in their eyes: it's flashy, violent and let's them execute their enemies after defeating them. What more could the angry teenage gamer want from a game?