The wii does not have the power to playback HD video.
WiiMC - WiiBrew
* CD playback: the Wii drive is DVD only
* HD output: even on component cable Wii hardware is limited to 480p or 576i
* 5.1 sound: Wii hardware has only two analogue audio output channels (2.0)
* 720p/1080p playback or downscale: power is not enough to even decode, not to mention downscaling
* Deinterlace: CPU is not powerful enough, and MPlayer filters are not optimized