In some countries, the laws are really much more on the side of the big companies, and the rule is "if it can be put into a perspective that looks dangerous to the company''''s assets, the courts will see it as dangerous".
The pandora could easily be spun as an unlicensed PSP, where users can play games without paying for them, and the OP crew can sell such hardware without paying licensing fees to Sony. The difference the Pandora has to a sufficiently powerful PC is that it competes in the same market as the PSP (handheld gaming)
Here in Japan, for example, the creator to a filesharing program was fined the equivelant of around $30,000 and put in prison for one year for "aiding software piracy".
Of course, it is all a matter of the UK''''s policies on pressure from international companies (OP is stationed in Britain, right?). Since I doubt that government has such policies themselves (and not to mention the fact that, by the time the psp emulation project gets really going, Sony will probably be caring more about the PSP2), I don''''t think there is any legal worries here.
Edited by Gilrad, 30 March 2009 - 10:41 AM.