Yes, when S-E announced FF XIII (May 2006), they had no idea that the Wii would be big and the PS3 would struggle. But they did know that Sony's console was going to be a hardware powerhouse, and that Nintendo's Wii would be underpowered by comparison. Since 1) they already had close ties with Sony, 2) the PS3 hardware would allow them to produce the visuals they were looking for, and 3) Nintendo hadn't had a track record of console success since the SNES, Sony was the obvious choice at the time.
Yes, S-E is making FF XII for 360 to recoup expenses, period. That's why they aren't releasing it in Japan; they wouldn't get their money back.
Square Enix can make epic games on the Wii. I never said they couldn't (and from a business standpoint, like I stated above, I don't know why they're not). But if they're looking to set an industry benchmark for graphics (which they seem to try to do with every successive FF release), they aren't going to be able to do that on Wii. The Wii isn't the ideal platform for the pseudo-movies that S-E seems to be intent on producing.