http://kotaku.com/5304117/sony-patents-method-to-emulate-ps2-on-ps3
The Emotion engine is only 1/3 of the problem. The other 2 issues are the "graphics sythesizer" 3d card and, from what I was told, the unique ram setup for the PS2. This is a step in the right direction, though. I wouldn't be surprised if we saw a small list (maybe 5 or 10%) of PS2 games become playable on 40 gig and later PS3s.
Once we see news about them filing patents for methods to emulate the 3d card and the ram on the PS2, it looks like BC will be back for good (though perhaps never as good as it was on the American and Japanese 60 gig...)