exFAT is more so for flash media [ie. SD cards]. The Wii WILL NOT read this file system. It is a microsoft specific file system.
It also doesn't "have" to be formatted as fat32, you can also format to WBFS, which in my opinion is what you should do. Remember fat32 can not store a file bigger than 4gb on it at any time. So if you have an ISO thats 4.4gb, you will not be able to store it on the drive unless you split the file, or scrub it so it's smaller than 4gb [not all games can be scrubbed to less than 4gb.]