The problem I see isn't that the jaguar hadn't enough power, but the single-thread performance isn't that much better, than optimized code for an in order architecture, that almost has twice the frequency. This is quite an achievement, even if the PowerPC architecture wasn't the strongest. You had 3.2 GHz for just one thread. I assume that this could be a problem in some titels that are highly optimized for the PowerPC architecture. But well, if the cpu has less to do with GPU drawcalls (don't know how bad the situation is on xbox360 but I heard it wasn't that good), so if they manged to reduce the time on that, they should have enough cpu-time. But still, the commands have to be translated into x86er commands.
There are also the timings that has been reduced. The xbox 360 had GDDR3 ram which had quite long wait times for the cpu. Also the embedded sram should be much faster (latencies) than the old embedded dram. So this can also buy some time for the command translation. Also there is more memory available, which should help with some caching-reoutines, too.
But still, this is quite an astonishing accomplishment to get that emulator working in that short time (phil said they began discussion one year ago).