I have sega cd, 3 of 'em in fact, and they play backups no problem.
Sega CD wont play discs from other regions, its bios prevents this. You can replace the bios with one from another region, and to a certain extent you can patch iso images to run on your sega cd, but the first sol'n is a hassle, and the latter only works about 50%.
But a perfect emulation will play hundreds of games I couldnt before. And, yes, Sega CD has a fairly large following, Sega in general has a fairly large and active fan base (People like me who own everything from the master system to the dreamcast)
similarly, I cant put an arcadefx card in my turboduo without an adaptor, which are very rare and expensive these days. So there are plenty of great titles (lots of SNK arcade ports) I can only enjoy via Magic Engine.
Its about preserving the platforms, who gives a crap if they met with commercial success.
I say the less successful a console was, the more important it be emulated, because its the only way most people will ever get a glimpse of what the Master System/Game Gear, Sega Saturn, Sega CD, 32x, Atari Jaguar, 3D0, PC-FX, TurboDuo/PCEngine, SuperGFX, Atari Lynx, Neo Geo CD, Neo Geo pocket, Vectrex, Odyssey 2, etc, etc were like.
I've seen several friends (PSX owners) play Panzer Dragoon Saga on my saturn, and were absolutely stunned to see what they'd missed out on by not taking the road less travelled..
I could give a rats ass if someone doesnt like the selection of free titles an emulator brings them..
Noone would complain if the next MAME release brought 100% neo-geo emulation, and that wasnt exactly a commercial success as a console. I'd wager a working dreamcast emulator would make people shit their pants - that was hardly a success either.
As for old games being 'crappy'.. Go fire up a copy of the freshly released "Antz Xtreme Racing", then tell me that 'newer is better'. Or watch my 6 year old and his friends, who've logged more time playing my old NES than our xbox, ps2 and gamecube combined. Seems kids have a way of seeing past hype and knowing what is, indeed, fun.