I have to say the argument here is nutty.

They are saying that because the games are distributed with encryption and the emulators play decrypted games they are therefore primarily used to bypass the encryption. If that process was moved out of the emulator into a separate app then their argument would fall apart.

So it isn't that the emulator can play the game at all. It isn't that it can play decrypted games. It isn't even that a pirated game can be played on the emulator without checking the licence. It is specifically that the emulator can take the prod.keys file and use that to decrypt the game.

By that logic if someone takes Suyu and moves the decryption logic to a separate app and makes a Suyu which only plays decrypted games then there would be no case for the DMCA takedowns on the emulator.

Is my understanding flawed here? If that is accurate, why have developers not done so? You could even have Suyu call the decryption program which is installed separately and presumably not fall afoul of this legal issue? I mean, the logic seems really limited to actually facilitating the piracy, not to emulating the operation of the console.