Just watched the video, and I think it looks fun. I have kids and they would love to work with something like this. It is definitely in the 7-10 year age range. It looks like Nintendo is building off the success of the Makey-Makey product. I love that it shows how the cardboard creations integrate with the game. I do see a couple of potential problems. First, I agree that kids will tear that cardboard up quickly, and some lower priced cardboard replacements would be a good idea. Next, I think that the age range will be a little tricky. Children have to be old enough to put the cardboard items together, but young enough so that they won't get bored with the game too quickly. If the assembly process requires too much parent supervision, parents will be less excited about the product. Last, I don't know how much of a money maker this will be. Not only does play to a certain age range, but it is also a specific type of kid that is interested in making these things. I have purchased the Makey-Makey product and some kids got over it right away, and some are still playing with it right now. I think that potential market is really small.
I think that it is great that they made this product. Nintendo usually wins when they gamble on stuff like this, which means we usually win. But I fear this product will live in the same realm as gyromite and virtual boy.