Can you name an example of something better?
That depends on what you mean by better. I can think of at least a dozen games I've enjoyed more than Super Mario Galaxy, and I really enjoyed Galaxy. If you're talking about production values, there aren't very many games with the polish of Galaxy which come to mind. Big budgets don't automatically equal fun games, though.
Is there even anything insulting in suggesting SMG as the best Wii game?
Not insulting to Galaxy, but I feel that to claim it as the absolute best Wii game is a disservice to many other Wii games. I have a similar problem with naming Zelda: Ocarina of Time as the best N64 game, FF7 as the best PlayStation game, etc.
I figure SMG2 will be great but it will get some flack for being too similar. Is that fair?
In the context of reviews, any kind of comparison is fair game. That's one thing reviews are for. A better question is, does it matter? Personally, even when I look at games through a critical eye, I judge most games based on their own merits and don't really feel a need to compare.