The UE3 engine is heavily built around pixel shaders. Everything it does is based around shader support.
The Wii is not capable of doing pixel shaders. The hardware can't do it. Period.
Take away the shader support, and UE3 becomes no different than UE2. Note that UE2 does, in fact, support the Wii platform.
This is a hardware issue, it has pretty much nothing to do with Epic.