Like it has been said these games will be modified, most likely to fill the entirety oif the PSP's screen and also account for the button configurations. This emulator will not be for PS2 games at all! That is a pure rumor and one that isn't true.
They will distruibuted through some sort of Sony online service, one of a kiosk type,that has been seen at GDC
here. Although i'm sure the main one will simply be through wifi that you can connect to anywhere.
Yes PacManFan is developing a PSone emu for the PSP (one which I am helping out with) The community is still supporting him and as far as I know he is still working hard on it! It's not like sony is going to be releasing every single (modified) PSone game or anything for the PSP, so a PSone homebrew emulator for the PSP is something we should all be looking forward to as well.
All these games will cost a "small fee" I would guess about 5-15 bucks USD which would be a bargain IMHO. Because it is distributed didigtally it's saving both Sony and the consumer money.
I was really cautious not to upgrade my PSP, but once this comes out i'm pretty sure I will

I hope all you PSP owners are looking forward to this October! And as soon as this becomes available, I will write up a little review (with pics) here, but that won't be for a while!
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