specs definitely don't make the system, that's absolutely true, but it helps a damn lot. PS2 was technically, by hardware, outclassed out the door by PCs easy and spent its career outclassed by the Gamecube and 360, but it still managed to look almost as good due to developers pushing hardware. 1GB of RAM is still plenty to run an operating system like Android, though we don't know how customized it'll be. worse, the timing is going to be a really big problem because Wayne (NVIDIA chip, Tegra 3/Kal-El's sequel) is out in half a year and its rehaul is heavy on the GPU. there's some definite problems that are going to be seen, known, and difficult to overcome from a hardware perspective.
with that said, the indie game scene isn't one i'd compare with movies. on that level, games are simpler to make and enjoy, with less problems, people, and issues. it's a saturated market, especially with all the bundles, but there's some real, legitimate quality in there in sizable quantities that can appeal to just about anyone. we know that smaller devs can, and have, created a lot of impressive games and the idea is that there are more out there worth reaching, especially if they're doing games that aren't regulated to phone/tablet design, but focused more on a desktop (which tablets will also double for as that market gets absorbed into laptops and phones). nobody's investing in this thing to play Angry Birds on their TV, they want some games that don't insult the player or are these 2 minute and put down games. it's something that developers are interseted in, but there's no clear market for it; tablets? not there yet, ask again when the x86 architecture laptop/tablet hybrids (in that order) are out. phones? that's a joke, right?
but this? this shows what a lot of people want.
you CAN make a successful game like this for Android. if for no other reason, there's a successful system behind it and people will want it. the project makes it pretty clear that they want to bring console gaming (hell, handheld) to the system.