First thing -- the pandora is not the first device with a touchscreen; consider the looong history of Palm, Windows Mobile, Zaurus, and so on
We've been doing emulators with touchscreens a long time, and it works great.
Dungeon Master and Captive (and so on) with a stylus is fantastic, and almost feels like cheeting.
The way I usually implement is to allow one of a few modes.
ie: One mode is, 'touch to move', with buttons to do mouse clicks. Another mode is 'touch to move and click', and another still is 'touch to move, touch and hold to click'. (With variations for allowing right click as well.)
ie: Dungeon Master; touch-to-move-and-click mode works well, so you can do things like touch tap on the turn-left and the mouse moves over there and clicks, so hyou turn left. Very intuitive.
I usually also add control modes.. ie: LEft trigger usually does 'rotate left' in Dungeon Master control mode, and the d-pad does the movement keys; so you can walk around the dungeon using the controls, without using a virtual mouse at all.
Emulation can be strict, or it can 'enhance' (or subtract from).
BTW, I do Atari ST emulation and a boatload of that is going to be ready at launch or soon after, so you're taken care of. (Dungeon Master came from the ST to Amiga, and the Amiga one is a identical port; so ST and Amiga will both be emulated, so take your pick. Same for Captive, which came from the ST. Eye of the Beholder is not on ST, and is on Amiga, so go there for that one.)
Youll be well taken care of,
jeff