You missed my point entirely, consoles use server architectures for many reasons, low power, long life, reliability, but raw power is not one of them. Power7 may be the best server processor but it is not "Quite literally the most powerful CPU on the planet", when it comes to gaming there are dozens of other processors that will perform better. Games do not benefit from heavy multi-threading so anything with a higher clock-speed and a few cores will be better. 32nm Procs can achieve higher speeds at the same temperatures which is why for gaming they will walk all over the Power7.
I don't have a problem with the Wii using that processor, It is a much better fit for the console form-factor than a high power, high heat, desktop processor and the GPU will be much more important anyway, I only object to your particular description of it. I won't continue to argue with you, we will just see how it holds up once the other players bring their machines to the field.