I fear definitions may be being stretched somewhat there, moreover I would argue SM64 was classic (?) 3d levels with a rather nice level select, Zelda is much the same for me, doubly so if it is broken down into rooms/screens and dungeons. At this point I have not really done skyward sword so I can not say much there and this was going purely off that video.
This looks like it might be aiming at being some kind of answer to elder scrolls, might and magic and all that jazz, however this has several of the signs of the indy dev that just realised how much effort it is to make an enjoyable 3d open world game in the 2010s (or a slightly larger dev that thought it would go up against world of warcraft). Maybe I am looking too much into early code and level massaging would probably be something they look at later (though a lack of automated stuff does say great things), however as tightly scripted as the rest of that was I would have expected a tiny bit more effort on the game front.
The definition of open-world game is pretty clear. If most parts of the "world" (that is, the setting the game takes place in) is accessible at most times in the game, it is open world. If you are forced to progress through linear space and/or missions, it is not open world. Zelda and Metroid for the NES were two classic examples of an open-world game. Super Mario Brothers was a classic example of a linear game. These are examples taken straight from the Wikipedia article. You can have a "tightly scripted" open world game, especially if it has a lot of sidequests (example: Mass Effect). You don't have to have a completely non-linear plot to have an open world game.
It's very clear Nintendo wants to make a huge playable world in this next Zelda iteration and that very quickly begs the question: at what cost? Wii U isn't a very powerful console at the end of the day, with only 2GB memory and tri-core CPU. They can't possibly keep a big draw distance with high quality textures and lots of polygons on the screen, it's impossible. So what's the compromise? In Skyward Sword, they wrote off the limitations of the Wii by implementing a "bokeh" effect (blurring of the background). Attempts to render Skyward Sword at HD resolutions on capable PCs with Dolphin have shown that game would've certainly seen a lot of graphical benefit of more capable hardware.
1. The CPU of the Wii U actually seems to be reasonably good, perhaps even better than the one in the PS4 and XB1 in many regards. The Wii U CPU has three PPC cores dedicated to gaming (and it is believed games can shut down cores to overclock the CPU) plus at least two or three more ARM cores dedicated to running the OS. It is pretty unlikely that Wii U games will be limited by the CPU, at least no more so than the PS4 or XB1.
2. The Wii U GPU and RAM are primarily responsible for things like draw distances, lighting, and polygon count. It is true, the GPU power of Wii U is about 3 times as slow as the XB1 and about 5 times as slow as the PS4, but I don't think that really means much when Nintendo is optimizing the game for the system. There were plenty of games that looked great on the Wii, PS3 and 360, and all those were significantly less powerful GPUs (the Wii's GPU might be 50-100 times less powerful than the Wii U). It's certainly true that a lazy AAA port will probably look a lot worse on the Wii U than on the PS4 (and a lot worse on the PS4 than on the PC), but we're not talking about a lazy port. We are talking about a game designed solely to look good on the Wii U in the art style the designers have chosen.
3. The "capability" of the Wii 's hardware is not why games look better on Dolphin. The reason that they look better on Dolphin is that they are being rendered at the television's native resolution rather than being distorted by up-scaling (plus, they might add on a few after-effects like AA). You're getting the same exact rendering whether it is on the Wii or Dolphin. The only difference, is that the Wii renders it at 480p, which looks great on a CRT, but can get really distorted by the crummy analog upscalers in HDTVs.
The graphical benefit of Dolphin is not more powerful hardware. It is simply being able to render at the native resolution. No matter how good the Wii's hardware might be, it would never be able to render at 4K because it was only designed to output at 480p. The only exception might be AA on Wii games that didn't use it.