I really have no idea what the game does so terribly wrong, it has ok graphics, lots of destruction and a control scheme that kicks the crap out of the mouse/keyboard setup.
I don't know that I'd go so far as to say that Red Steel puts keyboard/mouse FPS controls to shame- but it most assuredly does put analog stick FPS controls to shame.

I'd also go one further than "Ok" graphics, and say that in many places they actually look quite good. Red Steel shows alot of promise for the Wii in general, imo. Consider that the game was probably designed almost totally on the development prototype Wii (basically a GC with a Wiimote) and, iirc, developed before the Wiimote "learning" development kit was released as well. This suggests to me that there should still be significant room for improvement graphically and in terms of controls for things such as sword-fighting.

While I'm at it, the sword-fighting really isn't bad at all. It's just all about timing- parry/dodge, attack, attack, then rinse & repeat. If you can get proficient at the knock-back parries, you can usually put a beating on a guy pretty quickly.