"Blowing it out of the water" is a relative concept. We could see diminishing returns play a bit of a role this gen. Wii U will be okay. I have my PC for when I feel like graphics whoring.
Blowing it out of the water? Sounds like what you're doing. A roughly 2x difference is the difference between current gen systems and the Wii U. A 20x difference resulted in the differences between the Wii and the current gen systems. So please explain to me how a 5x difference at most, will result in these astronomical differences you're proposing.
Any noticeable difference that can't be replicated on another system, I would consider blowing it out of the water. WiiU probably won't have any graphical advantages; just graphical disadvantages. I think people shitting on the WiiU are wrong, but I also think blind optimism is wrong too. The WiiU is a great system and I think it'll do fine against the other systems, but you can't compare them graphically and expect the WiiU to come out on top. Our realistic expectations for the WiiU in terms of flops is ~350 GFLOPS. IF we multiply that by 3, it'd still get shit on by Durango, not to mention Orbis. It can compete with them, in the way a college basketball team can compete with an NBA team, but that doesn't mean that it'd really be competitive. I mean honestly, I don't care if the the other systems are only 1.5x stronger than the WiiU. It'd still be weaker, probably pretty noticeably so. I'm not saying the other systems are 5000x stronger than the WiiU and I'm not saying that it's weak, but I AM saying that Nintendo clearly isn't trying to compete with the other systems' specs. I personally think that's very smart of them because the battle that they're waging is very high risk and likely to put one of them out of the console race in the near future.