To start off, what is the point of these debates, it appears people are drooling over anticipation of attacking Nintendo before the specs are released on Revolution. I can understand the comparison between Zelda and the next generation systems, because Iwata is right especially now days, there is little difference graphically between new consoles. In fact since N64 I haven't seen anything that was a drastic step above it the following generation, not like the SNES and the N64 or SNES and PS2. Power under the hood is mattering less and less, especially if you want to focus solely on games (since PS3 and Xbox 360 will be "mult media" consoles they require more power, it is common sense).
Going back to Zelda TP, I have been more impressed with the graphics than RE4 since the game is more expansive than RE4 was, and thus requires to spread out the graphical joy a bit more thus leading to less detailed enviroments and enemies. They are two different games that require two different graphical schemes due to their game design! That is like saying a fighter for GC is better looking than any other game, well of course, they do not require expansive enviroments and can focus on a smaller one giving a noticeable graphical flare.