You would have to find a way to emulate the Emotion Engine core and the I/O core, as well as other things.
For the EmotionEngine, you'd have to efficiently emulate the two vector units, the MIPS CPU core, the MPEG2 core, the graphics synthesizer, and a few other components. And, remember, the core works at 128 bit SIMD.
Then you have the I/O, which is essentially a PSOne core for all intents and purposes (which was also how they managed backwards compatibility with the regular PlayStation library).
And, of course, all elements must not only work efficiently and accurately, they also have to work in perfect synchronization with each other.
There would definitely be challenges for the X-Box to emulate a PS-2 properly, much less a G5 PowerPC or a top-of-the-line Pentium 4 HT setup. - Reinhart