It doesn't look like more than the Wii can handle, remember we're talking about two Gamecubes taped together, not two N64s. Maybe the texture detail is a bit high but I wouldn't say it's impossible to do. The geometry detail is fairly low, the environments are fairly simple, just a few bleak walls and in the town zoomout you don't see a lot of geometry detail either.
I do find it curious that they cut away from the game footage whenever the sword would hit the other guy, either they want to hide the lack of blood or they just haven't implemented the alternative hit effects yet.