I think the future is grim for the Rev. The GC is a good system, so the next will have to top it. With so little improvements on the GC, will people want to buy it? By the time it's released, the 360 and PS3 will be out and everyone dazzled with them. Release something that looks like them in body style, but so much less graphically and you're asking for trouble. It's like having a slick, sportscar-looking hotrod with a compact car engine. If you choose the compact, then you won't be disappointed, but if you go in expecting HD and incredibly complex games you may very well be.
Their tactic is decent, but a huge gamble. If people are shy of shovelling out the dough for the top-end systems, then it will work. If the world has moved to HD and will settle for nothing less but the best, then their strategy may backfire (although if it's that cheap, I may buy one in addition to my future 360). Which might be yet another tactic. Let everyone have their uber-system. They'll offer a decent one for less that will have games not played on the big dogs.
In other threads it has already been pointed out that we need to give the 360 (and soon the PS3) designers a little more time to develop games with the new systems. I predict games that will blow us away so much that Rev games will struggle to keep up. Then Nintendo will go into software only and Mario will come play on 360.