Granted, in some cases it makes games look more realistic as it degrades the image quality and crashes the contrast ratio, so it looks more like footage shot with a camera.
However if you want a pixel sharp image with a good contrast ratio, component is NOT the way to go in my experience. But it does depend a lot on both the console generating the signal and your specific TV.
HDMI certainly seems to handle longer distances better. I have a 7m HDMI from my Xbox 360 to the TV which works perfectly. But extend a component cable to 2m from 1m and you see ghosting appear.
I also read that the reason 1080p over component is not commonly available is down to the AACS content protection scheme not working over 1080p.
Although seeing as the Wii U doesn't play DVD or Bluray, I think it would be pretty tight for them to bother using content protection on the output so perhaps you WILL be able to capture 1080p over HDMI. Although I bet they do protect it due to supporting on-demand services for TV. This blocking your ability to record things is such a load of crap.
- verk likes this