I just want to interject with a couple things here. The android market is controlled by google, you have to pay to get in, they control the content. You are not forced, and in some cases, are unable to use the market on your device.
Android it's self is open sourced and there are plenty of alternatives to the google android market and nothing stopping you from adding the content of your choosing to your device from any of those alternative sources. (minus carrier imposed restrictions)
Google, while supporting open source ideals, has a business to run, I don't know the details behind them removing this and other types of software that was in violation of their agreements with the application developer. But they are in full right to do with their market distribution source as they choose. You agree to it when you first run the android market, and the developer agrees to it when choosing to distribute their software in that market.
What is pointed out and focused on is the bad, but the market also ensures non-malicious software, the software remains sandboxed unless specified, the software tells you what other services or application it modifies before you install it, and that the program conforms to the restrictions set within the sdk. If you want stuff outside of that scope, agian, get your software elsewhere. And there is a user friendly way to do this(read no need to hack, enabled within the GUI)
It would be like criag pulling an app from his app store because it was in violation of anything. It could be downloaded at a alternate location. Luckily for us console emulation is legal.
What I think happened, sony attacked the most downloaded psx emulator in a throw shit at a wall and see what sticks tactic, and use the results of that to intimidate the lesser known emulators and rom downloaders that are still available on the market. Seeing how google and sony are working so closely together it makes sense the biggest competition for software sales for sony would be taken down. Selling a program that can play games you already own for (almost) free rather than repurchase the software for 5-6 bucks a pop.