ARM are very friendly to emulator writers in fact. I wrote a data path level emulator of the ARM for my PhD (called SWARM), and within a day of putting it on the web (announcing it on Freshmeat) ARM invited me down to Cambridge to give a talk on the simulator and my PhD. They were even said if I wanted to sign an NDA I could try validating it with their test suite, but I didn't need my simulator to be amazinly accurate, so declined. Still, they were very positive and I got to visit ARM and chat about technical stuff with their engineers.
But at no point did they try and get me to do anything legal. The only time I heard from ARM legal was when someone tried to do an open source hardware implementation based in part on my source code. The simply asked me to add a note to the readme that ARM don't take kindly to hardware implementations of the ARM, and people should refrain from doing so. During this in no way at all did they get at me.