To be completely consistent a Linux emulator is just as unwelcome as a Windows one (except for the fact at least with the Linux one you avoid getting into the clutches of Microsoft). The same arguments apply to it - it will (IMHO) damage the hardware development end of RISC OS, it will *weaken* the platform as a whole and it may (unlike VARPC) be more appealing to the RISC OS "holdouts" who wouldn't contenance using RO under emulation while the only option of windows was available.
The irony I can see in the current discussion is that ARM themselves *will have to* up their chip performance simply because Intel *is* targetting newer x86 designs at the "low power consumption" niche where ARM had seen as its own. ARM have no where to run and hide and I believe when faced with that they'll raise their game.
ARM have announced larger caches (c. 2MByte), have started looking at other architectural enhancements (e.g., superscalar) and (wait for it) faster clock rates. If ARM *does* improve its hardware (or well it's licensees do) and there is *no* RISC OS base to take advantage of it (because of emulation) then we'll all be the worse off for it (IMHO).