I know nothing about the actual underlying architecture but from the (credible) sources I've heard from apparently it's a really nice API hiding an absolutely unholy mess and that's why emulation has been so poor for so long.
If the API is nice, shouldn't the emulation be easy ? Since the emulator doesn't have to care about security / hacks.
Or do you mean that the API only nice in theory, but is actually not nice in practice (lot of undocumented corner cases, or bugs, that games might rely on) ?
I have no idea about the specifics but from what I've heard developers really liked the XBOX (despite it's unholy internals) so I'd say the API was actually nice.
As for HLE based on the API it's definitely possible but there's probably tons of nasty corner cases and that's my theory on why it's never been done. That and the chance of games with their own proprietary APIs existing and thus they won't work with that solution.
