Philip

The sound through the guitar could be helpful during multiplayer, where the mistake "twangs" will come directly from the player making them rather than the tv. While the mistakes in real life are normally heard from an amp, that is distracting and confusing in multiplayer mode and this will let you know exactly who is screwing up.

As for rumble, who knows how much the wii remote will actually shake the guitar given all the movement when playing and what feedback the vibration even gives you. So you've got a good argument for the rumble possibly being lame, but come on... its a cheap plastic guitar for a game, it's not supposed to be real.