For the record, Ikeda said:
"In terms of the hardware, our machine?s graphical power was pretty poor for the previous installment, ?Dodonpachi?, and so this led to many days of questioning myself: ?if I really can?t surpass the previous game, why am I working on this one?? We also had Treasure unveiling Ikaruga at the same time, and so in addition to that question I was also struggling with the dilemma of ?
I know that we can?t do better than Ikaruga, so why are we making a game for the same platform, and of the same genre?? I really worried about this. But finally, I resolved it by rephrasing the problem: ?the hardware?s graphical power is not going to improve no matter how much I struggle with it, and
I?m never going to be a genius that can make a game like Ikaruga, so worrying about it is just a waste??
From adverse's translation
here.
Ikaruga is pretty incredible, and when it was released in 2001 it was groundbreaking, so it's not hard to see where Ikeda is coming from. To this day I find it to be better than most Cave games.
You're right that most Japanese won't come out and say "we're the best at this," but they also won't lay such high praise on a game or company unless they actually respect it.