Re-reading the Iwata article, I think Nintendo have done this...
With MPEG:
- you receive the entire frame.
- if there's any problems with the connection, you pause and wait until you have the frame.
- when you have the frame, you decode the data, and render it.
The frame is delayed by 'time taken to render the entire screen + total transfer time', memory used is relatively high etc.
With Nintendo-tablet-vision:
- you receive a block, if it's complete you render it instantly.
- if there's any problems, you ask the Wii-U to resend that block later in the stream.
- when the final block is received, you render it and flip the framebuffer.
The frame is delayed by 'time taken to render a single block + total transfer time', the memory used is approximately equal to the framebuffer size x2.
I'm not sure whether some form of MPEG can do that, but it looks like a very low latency system with low processing/memory requirements on the tablet. (doesn't appear to help the Wii-U itself in any manner that I can see)