By the way, I find it odd that you'd complain about people winning lawsuits you consider frivolous (the spilled coffee reference) and still be absolutely certain that Nintendo wouldn't lose one.
That lawsuit was won because McDonald's served the coffee way too hot in the oppinion of the judge (although it was still below the recommended temperature for coffee). Nintendo has been actively taking measures against epileptic seizures in their games, there's no way one could blame them for negligence, never mind that the guy who died and caused that lawsuit had several epileptic seizures before (he was in his thirties IIRC) and should have consulted a doctor. That he continued playing despite knowing that his body cannot take it makes it pretty much suicide and possibly negligence on the part of the mother who sued instead of prying the system and TV away from him. Medicine has the risks listed in a leaflet and that's sufficient despite much greater risks.
As for dragging out a court case until the plaintiff can't afford to continue, I don't want to support that kind of behavior. Even if I am a Nintendo fan--actually, because I'm a Nintendo fan--I don't want them to sink to that level. Regardless of whose side I'm on, that's not justice.
I think it is justice. "Exploit a flaw in the law against us, we'll exploit a flaw against you". Being able to sue others for the result of a conscious action on your part where you could have been reasonably expected tro know better is a flaw in the system. Never mind those overbroad lawsuits where people sue like 15 different companies because they tripped over a brick. Hell, people sued Nintendo over GTA!
So if Nintendo figured out you where playing rip games they be in there right to disable your Wii?
Sure, then they get a public backlash because people feel unfairly disadvantaged or even worse got false positives and the resale value hits rock bottom. Of course they also have to inform the buyer that the Wii can be disabled and under which circumstances since otherwise the buyer bought the product expecting something different from what he got (a Wii that works vs. a Wii that self-destructs) which again falls into fraud.