I don't know what Netflix is doing with the Wii but holy cow is it bad.
I've been watching content for about an hour and a half of all kinds and they're all horribly compressed to the point of unwatchable for fast action scenes and there's tons of artifacts.
The Wii is the 4th device I've used the "watch instantly" service on and it's easily the worst and there's no reason for it.
I urge everyone to submit the quality rating after each video you watch and also Email them and complain about this shoddy service on the Wii. These is no excuse for this kind of quality anywhere. All content looks bad no matter what you watch. Know the way that bad cable service makes HD look because it doesn't give the channel enough bandwidth? Multiply that by 10 and you have this quality
Make sure you speak up to Netflix. They ask you after every single thing you watch and don't settle for the "the Wii only does 480p" excuse, this is not a result of that
EDIT: A picture is worth 1000 words? Well then these are at least 3000 because they're Godzilla!
Picture 1, super duper compression
Picture 2, compression AND artifacts
Picture 3, more compression