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Yawn, this again...

In order to run PS2 games in hardware emulation BOTH the Emotion Engine and Graphics Synthesizer chips have to be emulated. Quick fact: The memory in the GS has too high a bandwidth for the PS3 to handle cycle for cycle.

Software emulation - using some sort of HLE is possible, but it will have to be tweeked on a GAME BY GAME basis. Those people waiting for true hardware emulation will be waiting for a long time (read eternity). HLE is nothing new - look at X-box to 360.

Move along...