first parties are publishers, not developers. MS/Sony/Nintendo have all sorts of developers, some that they own and some that they don't, create games for them. These are all first party games.
This would be what nintendo considers a "second party game" I believe.
Overall it's slightly more powerful but it's clearly in the same ball park as ps360, and came out 8 years later, it's nintendo's fault for not making hardware much better then current gen for developers like Microsoft and especially sony did.
That has absolutely nothing to do with anything related to not upgrading any aspect of the port. That's more budget/time/etc. The small team at Treyarch had specific goals given by their budget and time, and I'm sure visuals were at the very bottom of that list outside of framerate. Not everyone has the time to do what Nintendo or criterion or what have you can do with the box. Like I said, the machine isn't going to be brute forcing anything.