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Is the emulation layer thin enough for a non-stupidly specced computer to run stuff? Or is this more of a theoretical/advancing for the future thing?
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PS5 emulation on x86 hardware will be more like running wine, so as long as your PC is as powerful as a PS5, performance should be close...eventually. The real performance bottleneck will be the GPU translation layer, much like converting DirectX to Vulkan isn't trivial, so isn't converting GNM (PS5's graphics API) to Vulkan, even tho the APIs are close (IIRC, they're cousin APIs)
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The main problem is that PS5(and Xbox) has unified memory, that's the whole advantage of these systems. You can put your texture in one place in memory, have the CPU write to it and the GPU can immediately read it from the same address once you are finished. It's an absolutely huge performance advantage, that the typical PC architecture doesn't support and doing such a thing will always incur the penalty of having to transfer the data from system ram to GPU vram - with enough bandwidth and fast memory the issue can be somewhat mitigated, but it doesn't change the fact that on PS5 your GPU can start reading the data the CPU just wrote nanoseconds after it's done, on a PC you need to wait for the transfer first.
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There's also a Switch emulator that's being made for the PS5 that's a port of Eden. It's called ProsperoEden and can already run some games [1]

[1] https://www.youtube.com/watch?v=QXGiTuSAZ5o

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Heck, someone in the emulation community dropped a preview that they're a couple of months out from creating a Switch game recompiler - which generates native x86 windows builds AOT. It's incredible.

I have to imagine that AI has significantly increased the velocity of technically demanding hobby projects.

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The recompilation scene has exploded recently. Seems like it could be the future of retrogaming where you get an actual native build of every game. Also opens the door to full mod support of old games as well as being able to run more demanding games on hand held devices that previously didn't have the power to run certain emulators.
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