$99 console isn't a bad idea, no matter how you look at it. $99 is something parents can say "For less than $100 I can get my kid a video game console. I'm a good parent!"
Yes, you can get a $99 Xbox 360 some places but that comes with an Xbox Live contract. A $99 Wii, no strings attached, will appeal to a lot of consumers. It's a magic price point.