the only thing that seems to imply disc based support is that the method doesn't require modifying the original copy.

Just yesterday you told me it was very very unlikely Sony will allow disc based software emulation to which i wrote up why i thought the opposite d:

This crows gonna taste really good for you, or really bad for me. Fingers crossed

Not so Quick: If you look at section 600 to 610 Its has a ref. To subsection 600 it gives examples of such storage medium, I would think sony wanted to be as broad range on storage as it could.

We know since the content has to be read to compute it somehow, and as you know Sony's ps4 optical drive does in fact read DVD's , it is quite possible that setting a 2 step decode process could be available to this . not saying for a fact, but its a possibility though.

No crows need to be eaten. People can be wrong. Crows are only eaten by those people claiming something won't happen because they don't want it to for 'console war' reasons. This isn't proof though, just potentially one small clue.

Also, PS2 games can be copied burnt and read from a DVD disc by a non hardware modded PS2.
PS2 games are stored on slightly customized DVD discs. The PS4 can undoubtedly read PS2 discs, of that I am 100% certain. The deciding factor will not be royalties either as Sony won't have to renew any kind of license or so on for aa game that's already been printed and purchased. The one factor we have to worry about here will be whether or not Sony wants really good PR, or would rather have a small portion of their classics revenue taken out. I'm hoping this chunk of revenue will be worth the PR instead, but we'll see

True. This is exciting. 

One other tiny clue could be related to the question, 'why are Sony verifying this now and not waiting for the Playstation Experience?' Well, perhaps they consider announcing a disc based solution a better announcement than just emulation.

'As you are already likely to be aware of, PS2 emulation is coming to the PS4, but what you won't be aware of is you can use your old PS2 discs.'

Truthfully I haven't regarded how the X1 plays 360 games as true emulation in the first place.

Sony has quite good emulation dating back to their second generation systems. At launch, the PS2 supported >95% of the PS1 titles. At launch, PS3 supported >95% of the titles. Both of these were disc based. From that precedent alone I expect disc based emulation with support for >95% of the titles, when it comes out. THATS how its done proper and I'm thinking that the past two years, some core group within SCE was charged with sorting through their legacy software and configuring/optimizing this emulator for a grand reveal... Which isn't happening a moment too soon.

I'm gonna be so sad if its not disc based lol.

Then get ready to be sad

Will have to buy the games since I didn't had any original disc at the time