JayFoxRox on the gp32x boards was working on such a thing and had a fair bit of success. No where near ready for release, but it showed some promise. I think he's on a break from coding right now, at least until his Pandora arrives.
Even so, it may never reach a point where it is anything more than tech demo. On the other hand, even if it doesn't pan out for the Pandora, 4 or 5 years from now, when the Pandora 2 is ready to ship, the ground work that Jay is doing now will probably make it perfect for the future console.