"This is a totally new type of entertainment, and there are large individual differences in the biological information of humans. For example, if it was acceptable that only 80% of the users thought the result was natural, then we could propose this to consumers right now. However, we are aiming for a level of quality in which 99% of consumers feel comfortable, and that is why this project is taking time to complete."
If the vitality sensor does show up for the Wii I think Nintendo will attempt to keep the system alive for another couple of years, a "third pillar" like they tried to do with the DS, GBA and Wii. This way they could still cater to their new found casual audience, while focusing on the early adopter core crowd on the next system. Nintendo won't need to worry about attracting casual users right out of the gate because they will adopt the system gradually as it falls in price- and the system will likely be completely backwards compatible with the Wii. I do feel as though the vitality sensor could have some interesting applications for core games as well. Just imagine the next Fatal Frame changing gameplay elements in reaction to the quickening pace of your pulse. But we will probably see it in Wii Relax first.