Wii HD? Not likely any time soon, though It's probable that their next console will do it.
But it really depends on what you mean by HD anyway. HD means High Definition. Technically, that only refers to the resolution, which is rather pointless.
Observe what happens with a PC game if you change the resolution: Not much!
You could rebuild a Wii to output HD (Supposedly, leaked SDK documents say it isn't even the hardware. It's the software artificially limiting the resolution), but it really wouldn't make things look that much better.
Remember, going to HD doesn't suddenly mean you get more graphical effects or something.
Having said that, their next console will probably do HD, because it's likely a lot more people will have HD televisions by that point...
Wether that will give it 'good' graphics compared to the other consoles of that generation is debatable though.
Oh, and just how expensive can the motion sensing technology be? Well it's not that expensive... But it does cost a noticable amount. Here in England, the Wii sells for £179.99, but extra Wii remotes cost £30, and extra nunchuk's cost £18... Add that up and you'll notice that's £48, or slightly more than 1/4 the cost of the console...
I also find it amusing to read comments suggesting Nintendo is a 'little company' up against two giants... OK, so that line of thought was more common when Nintendo was doing badly, and Microsoft is so large and rich it's hard to imagine any company outdoing them...
But did you know, Nintendo is a larger company than Sony? And that's even taking into account the fact that Sony makes TV's, Laptops, Camcorders... Etc...
I found that quite amusing the first time I heard it.