I don't think the R300 hitting 400mhz is that impressive. I mean, as stated in the quote, the chip is HUGE!
Nvidia probably could have taken the GF4 core just as far if they added more transistors and made the chip bigger.
But with .13 micron technology, they have many options to choose from. They could keep a very small core and pack quite a few transistors in while still keeping decent temps, or they could make a bigger core with a ton more transistors and great temp performance.
I do think nVidia had best be putting out there absolute best work, or else there could be some serious repercussions. This ATI card is the best offering as far as competition is concerned that ATI has released to date, and as such must not be taken lightly by nVidia.
One nice thing about nVidia being on .13 microns to start out this generation, is that it will be much easier to release refreshes, while still beginning on a design for .09 microns.
Even if TSMC and UMC aren't capable of producing them, nVidia could still begin design on the schematics.