I disagree with building up a PS1 library while making us wait 2-3 years more for PS2 content. Sure, there are some PS2 games on PS Now at the moment. But I think it's only 18. I think PS2 games on PS Now is a bigger selling point than PS1 games, though I do want at least dozens of PS1 games on there.
I'm inclined to somewhat agree with this: PS2 games are a bigger selling point than PS1 games to many. But, as you implied, you cannot just leave out PS1 games. Perhaps they can start with both? Would take longer, but might give people the games they want faster. But I would say that this should be the stopping point. A legacy platform works best when you start at the beginning. When you build your library up from the PS1/PS2 days, the announcement and media buzz for comitting to the next platform (PS3/PS4/...) are bound to be huge every time. And it is going to get easyier with more modern systems - on those you got almost everything digital anyways.
Your pitch about PSNow adding PS5 games is certainly not a bad idea. But with that PSNow would ultimately just become another GamePass. Which is not a bad thing (I would not mind at all paying the price of one, or two games a year to play all of their games), but a bit unoriginal. With this I mean to say that becoming so similar to GamePass, PSNow will always (or for a very, very long time) be regarded as the inferior version of the same thing. If the service has it's own strong identity, comparisons to competitors could be more favourable.