For reference, the DSi XL has 4.2" screens. The Kindle has a 6" screen. If these rumors are true, this controller will likely be crazy expensive. We honestly can't see Nintendo getting away with selling $200+ controllers.
Kotaku also reports that this won't be the only accepted control method. "Project Cafe" will also reportedly support "Wii Remote-style controllers," the site says, though it's currently unknown whether that means the existing Wiimote or a new motion device.