I think there will never be another "no one passes" audition like the (un)Lucky 7 Audition. Here's why:
Going through the audition process in the first place is somewhat costly and time-consuming, and doing it without any results is almost 100% wasted effort.
I say almost, because at the very least it generates news and publicity. Too bad this only works once before you start to seem pathetic or too picky.
If nothing else, there will be pressure from the higher-ups to not eff it up again and waste resources.
The idol landscape is quite different now than in 2004-2005.
As was stated before, there's more incentive now to pick up promising girls, if only to keep them from being signed by the competition.
(If not for Morning Musume, then at least to keep them around for some other purpose a la Satoda Mai, Mikitty, Miuna, Miyoshi Erika, and Kikka.)
Tsunku may be crazy, insane, and unpredictable, but he isn't stupid.
Having gone through the debacle of the (un)Lucky 7 Auditions once, he wouldn't let it happen again just as a matter of pride.
To that end, I get the feeling he packs the finals with at least one surefire pick he's already determined to select, just in case he doesn't like what he sees with the other finalists.
I have 0 proof of this, but honestly think that Tsunku has enough smarts and pride to avoid making the same mistake twice if he can help it.
As for picking really young girls, this is nothing new. Just about every audition has produced at least one member in the 12-13 range.
I honestly don't think "long-term planning" is the main rationale for this.
If you look back through idol history, what I think is a more important factor is "fresh"-ness.
If I had to explain the idol concept in as simple terms as possible, it would be "cuteness" and "freshness".
When picking a new idol, all other considerations seem secondary to these two traits, and without them I don't think we'd really consider them to be "idols".
I think what keeps me a fan of Hello! Project and idols in general is the process of seeing how these fresh girls develop and improve over time.
Japanese idol pop is just about the only musical/entertainment genre I can think of where a more polished group at debut can be a drawback and earnest effort actually counts for something.
For me at least, it's the process of growing up, progressing, and evolving as a performer that keeps me interested.
That said, Morning Musume's average member age has been creeping up into previously unknown territory.
By that, I mean that the average age for the group has always seemed to hover around 16 or so.
Historically the average age has always been kept around that number by either graduating older members or adding younger members.
Right now, the average age is more like 20-21 and I believe this has been reflected in the type of songs they're given.
Without breaking continuity by having more than half the group being made up of new faces, going even younger is the only way to get that average back to where it used to be.
But why is the average age so important?
I think it's because the business of Japanese idols is about selling what essentially amounts to a Cinderella story.
To the preteen-middle school crowd (seems mostly female in this range), this is all about selling the dream of being like Cinderella.
In this target audience, having the average age be around 16 is both easy to admire and easy to relate to.
To the older mostly-male fans like me, it's more about youth, nostalgia, and capturing the short teenage years where girls grow up and transform the most.
For debuting idols in general, upside matters much more than singing or dancing talent.
Using Kusumi Koharu, who was picked as age 12, as an example, you couldn't argue that she was pretty raw at the start to say the least.
She could carry a tune, but definitely needed a handbasket. As for her dancing, well, she needed help learning how to walk like a normal person.
But even though Tsunku didn't pick the best singer or dancer of the finalists, I remember being struck by this realization at the time:
"Tsunku picked her for her potential. If you use your imagination a little bit, she has tons of it."
For this batch of finalists, even ignoring their ages it's easy to see some of them being picked:
For Kanon, she's got guts, doesn't seem easily shaken, and is cheerful and cute as heck. To me, she's a Makoto/Koharu pick.
For Minami, she's got some similarity to Koharu in looks, and is easy to cheer on despite being otherwise miserable performance-wise. To me, she's a Tsuji/Konkon pick.
For Riho, she's pro and will undoubtedly be a looker a few years down the road. For me, she's definitely a Goto/Aichan pick.
For the other two, it's a little harder for me to pin down. What I got from Tsunku's comments was that with them he's going for a "moe" or "little sister" type of character that hasn't quite been seen in Morning Musume before. But since they didn't make as much impression on me, I'm withholding Kago/Niigaki pick status for now.
tl;dr version:
Tsunku's got too many reasons now to not pick anyone like he did with the (un)Lucky 7 Auditions.
Picking younger girls isn't just about long-term planning, it's about freshness and keeping the average age down as well as changing Morning Musume's image.
Current finalists have good mix of skill, personality, freshness, cheer-on-ability.
I really like Kanon and Riho.