The GS's framebuffer memory (at 38.4 GB/s which is only used to store screen data on renders) is the only information readily available that might lead to this conclusion, and it's only 4MB.  It would hardly be something to worry about since they both have the capability to buffer whatever data needs to be displayed.  Nobody, including SSJ on this forum has enough knowledge to state that a video processor from the year 2000 could not be emulated using today's processors of which very little is still publicly known.  For all intents and purposes, the RSX outclasses the GS in every known statistic.  The only claims I've seen to incompatibility deal with specialized inline assembly code which could also be interpreted at the hypervisor level.

There's a HUGE difference between working with reverse engineering hardware and actually having the spec sheets, commands, and layout of commands readily available.  Also, the consoles are very similar (PS2/PS3) in architecture as opposed to the PC which has a completely different architecture using multiple memory controllers, I/O controllers, and other things that cannot easily be genericed into one set of code and run as efficiently as a console could.

 The PS2 and PS3 are not exactly similar. If they were you wouldn't need the extra parts to achieve emulation and developers wouldn't have spent the first year of the console's life bitching about how hard it is to program for the system. I'll grant you having the spec sheet would help a lot, but we are talking years and years of work. There has been success as well but not wide spread. There is an emulater that works with a handful of games but it runs those poorly typically. You are vastly under-estimating the complexity of trying to emulate the PS2.

No, I'm not.  If what I read was correct, the issues stemming from complexities in the PS2 development dealt with having to use assembly code to write data to streams on the PS2's chipsets.  They had to do this to "activate" certain functions and pass data to appropriate buffers to be processed.  All this fine grained tuning is what makes it hard for someone reverse engineering it for the PC (which is a TOTALLY different instructin set.)  It however, would not be overwhelmingly difficult for someone at Sony who has intimate knowledge and/or documentation about these core function to write wrapper code to do the same thing.

Edit: the reason they don't release it now?  Maybe they expect the PS2 to live on a few years yet before announcing that it's pretty much obsolete and having to foot the bill on a console that's probably losing them money at the moment.  Sony has a plan for the long run in this, as evident by their latest announcements and E3 presentation.  They probably see that they are comfortably moving into a profitable space.  I'm guessing they anticipated an adoption rate eclipsing the PS2 and thus included the PS2 emulation in the PS3 using the EE/GS chips in order to spawn sales and get that money back from licenses of games.  Now that it's out and the response wasn't as expected, they pull out the BC, keep people buying the PS2, and slide in emulation support when they finally phase out the PS2 because it's not selling or it's expense is too much to maintain production.