Yup, even then. Maybe not for a piano or anything, but try to make a guitar, sax, or a violin sound natural through MIDI. There is only certain information available for each note in MIDI formats and a lot of subtleties to instruments that fall outside of that. (obviously most modern MIDI samples ARE recorded from live instruments, btw).
Anyway, I wasn't speculating here, either. I know for a fact that this is how they did it and why they did it, because the developers themselves admitted it. And I also know people picked up on it and bitched about it before they ever addressed it (and before the Wii version was out). So not only can I tell, but so can anyone else who's actually listening.

