According to the FAQ, ROMs are exempt from archival backup laws. If this is the case, then it would be illegal to posess images of ROMs without consent of copyright holder. It should be obviously illegal to posses a ROM cartridge and an image of the ROM and use both of them. Such practice is like installing one license of software on two machines. An emulator of a device should not be illegal assuming no illegal practicies were involved in its manufacture. Such a program can be an excellent test bed for amature game developers.
There would be no doubt to the legality of such a device if it read the data directly from the actual ROM (through a hacked port). Nintendo is wrong when they say that the sole purpose of emulators is for playing illegally downloaded ROMs. This is a generalization. Such claims are the cause for persecution and hatred of people. Generalizations are claims with no basis that are used to create an enemy where one does not exist. I am sure some people have used emulators to test out games they have written.
Nintendo needs to accept the fact that piracy is illegal, and hacking is not. The hackers that study these devices for long hours and learn how they work and how to mimic them are intelligent and creative people who done no wrong. Nintendo needs to put blame where it is due and stop the real problem. Hitler persecuted the Jews because there was a depression that they were not responsible for. Nintendo is persecuting these brilliant hackers because other people are breaking laws.
Just think where we would be if IBM had stopped Compaq with the claim that "Clones are illegal."