GC backups do indeed work with the Wiikey (as it states in the list of things the Wiikey is capable of). You just burn them to a DVD in the same manner as you would with a Wii backup. If you look around, there is a program out there called MultiGameIsoCreator that can take multiple GC games and combine them into one ISO which can then be burned and played on the Wii as well. I can search for the link to the program but I'm at work right now and don't have time
Ha ha, don't worry about it. Yeah some GC games are much smaller then others. I downloaded Mario Superstar Baseball and Baten Kaitos Origins today and there was definetely a big difference in ISO sizes. It all depends on the game I guess.