Granted I do not tend to follow tablets and other such things that well but I have seen a fair few android devices use vendor specific (unofficial is perhaps the wrong word but as long as something like cydia or equivalent does not immediately pop into your head it holds) store fronts. Equally it would probably be better in the long run- console refresh cycle being somewhat longer (even if the wii u does end up being a short stopgap) than mobile phones (looking mainly at contracts) means the wii u risks being out of date/unable to run the latest and greatest after a while.
Nintendo introducing competition on their own platform... possibly but it might also be a hook- All your favourite android stuff as well as your favourite Nintendo stuff. One has to also consider the difficulty of setting up a new platform like this (see sony floundering with the vita equivalent and moreover their deal with steam on the PS3), I agree historically they have not really done much with third parties (deal with opera and maybe the likes of netflix, facebook and the others aside although more on that in a moment) but business wise Nintendo have not been doing that well (again see the stock price year on year-
Stock:Nintendo (NTDOY) in addition to the financial reports we have seen) and I can not see too many business analyst/advisor types faulting the principle of the deal alone (specifics certainly but that is just everyday business) and many of those are looking at the mobile side of things as something worth noting in general and for existing platforms. Equally you are going to need to have some very good arguments if you are going to try telling us that a percentage enough to be truly significant that would not have known of android and the ultimate conversion rate away from Nintendo of those (or maybe in general) is enough to tank the idea. It possibly cuts the other way as well- nintendo VC content on android marketplace (sega seem to be doing OK on android and many other classics are appearing there)- emulators are doing fairly well there and it would be free money for Nintendo.
How it would run- I imagine they would stick an ARM processor in there somewhere (for backwards compatibility with the wii if nothing else (wii IOS modules that run on the ARM coprocessor do have a fair bit of stuff to do and act as a library of sorts for developers to use)) not to mention it would be a nice hypervisor. Nintendo have some experience/relations with ARM (GBA through 3ds as well as wii) and stuff like the raspberry pi able to stick a decent ARM in there for not a lot of money chip wise. Also if they do have android based something they might be able to offload their web browser and other such functions to it which would be better for them*- can we all agree that the internet channels and equivalents have not been good compared first to a somewhat older PC stuff and second to the likes of android, maybe IOS (especially even/if you take their gimping alt web browsers into account) and other embedded platforms (granted I am told it was probably android underneath but some of the smart TV stuff is not bad once you get past the interface)?
*going further and looking at MS doing things with skype and the 360 the chances for android or google driven communications platforms is probably a very interesting prospect to both companies (Nintendo as their online offerings on the matter have not been very strong and google as they do not really have one- google talk, wave and everything else having thus far failed to achieve a great foothold in IM with even AOL, yahoo and arguably even bbm being more relevant than anything google has- their XMPP/jabber offering being about the best one they have and that is nice with a lot of nice features for the hacker/developer set but very limited in general appeal).
I should probably also say I see nothing special about making your own unique platform and have not done for a while (I was not surprised but could have seen a merge happen this time around and indeed I am of the opinion the PS3 vs 360 pretty much comes down which controller you like better and which online platform your friends are on if you care about that neither of which are a technical thing and aside from motion control offerings (for obvious reasons) I do not think any exclusives are either).