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The Bluetooth DaughterCard is based on the BroadCom BCM2045 BT chipset, fairly popular in cheap USB WifI dongles. It sits on an internal USB bus, and the Hollywood treats it no differently than any other USB device. Its interface is standard Bluetooth HCI over USB.
When the red sync button is pressed, a HCI event is generated:
> HCI Event: Vendor (0xff) plen 1 08
This causes games to perform a BT inquiry and connect to found Wiimotes.
When the button is held for around 10 seconds, the payload is "09" and is interpreted as a command to clear the BT.DINF section in the SYSCONF and clear all stored link keys.