Well it's all a bit ambiguous. An emulator, with some hacks, can interface to any physical external devices and trick the virtual WPC-95 machine into thinking it's connected to a real switch matrix, A/V board, driver board, etc. A good example are game console emulators. Typically you can run these using software emulation of the original components or though a hack that utilizes the host machine's hardware in some way. If this is really emulation, I seriously doubt everything is done using LLE (low level emulation) through software on the CPU. Another example is the discussion of implementing high quality music and sound. That would exceed the capabilities of the original DCS DSP, meaning an HLE (high level emulation) hack would need to be implemented to support such a change.
Things like the above, the color LCD, absence of a switch and lamp matrix, and other enhancements would make hardware emulation unfeasible. It would be running so many hacks that you might as well just re-write the entire system in a modern language and compile a new environment for the physical board it's running on. That's why I'm a bit skeptical.