Dont get me wrong, the M2 IMSA racing game is impressive, but it's not miles ahead of what the N64 could do in games like F-1 World Grand Prix, World Driver Championship, Beetle Adventure Racing, Top Gear Overdrive, Wave Race, etc. The backgrounds in those N64 racing games are just as detailed (if not more) than IMSA, but IMSA has a higher frame rate. It looks good for a launch game though.
F-1 World Grand Prix was released in mid 1998 for the N64. Here's a video (impressive car models in the intro, skip ahead halfway for in-game footage):
http://www.youtube.com/watch?v=LT6oYj9tzTI
World Driver Championship was released in mid 1999 for the N64. Here are videos:
http://www.youtube.com/watch?v=gn4pnAKS_d4 (click "high quality")
http://www.youtube.com/watch?v=9VJjrO5Ql3Y (click "high quality")
And of course, Wave Race 64, which was released in 1996:
http://www.youtube.com/watch?v=wYZuzsQxDCI (click "high quality")
Remember, these games are running off of 1996 hardware (the N64) with 4 MB of RAM (no Expansion Pak). Pretty impressive! Again, based on specs, the M2 seems roughly twice as powerful as the N64. IMSA certainly doesn't max out those specs, but for a launch game, it looks good.
And you're right, as I wrote in an earlier post, I imagine later M2 games would look much more impressive than the IMSA game. In the hands of a strong development team, I'm sure the graphics in M2 games would've kicked butt in the late 1990s...until the Dreamcast.
I'd love to see in-game footage of other M2 games.
If the M2 launched at $399, very few people would've bought it. $299 would've been much better...although I don't think the console would've been successful at any price, to be honest. Competing with Sony, Nintendo, and Sega in 1997-2000 would've been financial suicide.