So his emulator recreated high resolution, not interpolated sprites from scratch, based on low res sprites? He should show this technology to a game developer, he could make millions of dollars, cause this would be nothing short of ground-smurfing-breaking tech.
No, it didn't. I'm not sure how familiar you are with emulators, but many of the longest-running ones, even for 16-bit games with 2d artwork, can reformat the visuals to make it look like they were naturally prepared for widescreen, make the colors more vibrant than ever, and overall make all of the art look absolutely awesome at higher resolutions than modern HDTVs can produce. I played Shining Force a year or two before Sega released its Ultimate Genesis Collection and, while they did an awesome job, it wasn't all that much more impressive than the version I was already playing. Speaking of which, if Sega could outsource this very thing for 40+ 16-bit classics in a quick little project, how hard do you really think it would be for Square to do the same for just a few games?

Secondly, no, the early PS3s did not rely on software emulation to play PS2 games. They included actual PS2 hardware to perform this function, exactly because they had not been able to develop software that could successfully and efficiently emulate PS2 games. And are either still not able to, or simply do not want to because of some retarded corporate decision. This hardware was removed from later PS3s in order to cut costs, or so Sony claims, and therefore we no longer get that feature.
Me: "And Sony already made a PS2 emulator, 80GB models used them, whereas the original 60GB did it directly through hardware."

C'mon, man, I know your reading comprehension's better than that. Also, are you unaware of the generally common knowledge that they took hardware emulation out of later PS3 models and used software emulation in the 80GB models instead? That's pretty much a known fact. It was later taken out of the later 80GB iterations which also had 2 USB ports instead of 4. It's not hard to google.