This is certainly great news to hear. It's been a bit slow hearing news about homebrew on the 360 and this is one of the more highly anticipated projects (this and Freestyle Dash). This makes me think a few things with regards to the possibilities. Firstly (and leastly), this may be the first N64 emulator to get Pokemon Snap working correctly. Secondly, I'm suddenly reminded of some drivers for older Nvidia cards, allowing certain cheats that we haven't seen since the major controversy over them (wireframe modes, transparency modes, etc. allowing you to see through walls). Thirdly, and most importantly, this sounds like it could support the make it pretty mods for the Zelda games (high texture mods), and any future mods that require so much more hardware than we usually have our hands on. Obviously HD, but then true widescreen modes, with proper POV. Better quality shaders, added bloom, and I'm getting the feeling that I'm thinking too narrow with this as well..
I await this with baited breath.
Though I wonder, if this could allow controller mods, or connectors that would connect the original N64 controllers to the 360. I've got a couple controllers recently refurbished (the joystick replaced) that would love to see some 360 action.