This is really cool, I'd check it out if such a game were available to me...
It could be perceived as a threat to Nintendo but as usual, Wii is more than a controller. It's the whole package and the way the parts of it interact: the name, the size, the look, the internal memory, the price, the interface, Wii Sports. Not to mention that Nintendo and third parties have been targeting its marketing and games for the Wii audience for nearly a year. Microsoft is way behind.
It's too little, too late. MS is dabbling here and there, but all signs suggest that 360 and PS3 are simply incapable of competing with Wii. They need a whole new platform.