wouldn't running the algorithm against past years' records and testing against past tournament results be the best possible test to tune the algorithm?

Another factor is updatable firmware and OS over the internet. The console makers of this generation can fix bugs and add whole new capabilities that they could not do prior to this generation. Think of how Sony has kept the PS3 updated as a blu-ray player with compatibility fixes, adding lossless audio, 3D support, etc. Or how all the console makers have added Netflix streaming client capabilities, something that wasn't even on the horizon when these models were designed. Or how Sony and Microsoft were able to add motion control abilities. All this adds of to being able to extend the life of the current generation in ways that would have required a whole new platform before.

A good follow-up question would be: what astounding new capabilities would it take to motivate a next-gen console?