last time i heard emulators are not illegal ( http://www.robsgaming.com/downloads/emulators/emulatorFAQ.php#2 ). it's more of a moral thing, ie what it will be used for, copied games etc, just like mod chips. btw don't know if you guys know or even care but ps2 mod chips are now illegal in the uk.. http://www.theregister.co.uk/2004/07/21/ps2_mod_chip_win/
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info from www.ngemu.com