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Java (or managed languages in general) isnt the one size fits all super hammer, but its pretty good for a broad selection of applications (emulation hasnt been a part of that so far). I mean sure it would be nice to have everything written in asm hardcore optimized for this cpu, but that isnt really realistic. You always need to find a good trade-off between performance and development time/maintainability/security.
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Most compiled languages nowadays have very few instances where coding in asm would make a significant difference in runtime; compilers usually spit out the best code you could get. Most places where asm might fit nowadays is just trying to make up for slowness that could have been corrected in source code (i.e. insert sort vs. merge/quicksort, as a simplified example)
Not to say that asm has a lack of value; I know there are places in some code where it would be appropiate, but I haven't really come across it yet...and I bet it tends to get very machine specific beyond the simple asm code...