That's it, I'm going to work for free
I think that if you can do it well, go ahead, but it's not realistical. For most cases you will have to live out of something and if a coder decides that his shitload of work deserves some cash, right so. That's what he does for a living, and if he don't have much income and think his program is "sellworthy", why shouldn't he?
Retro related activites such as emulators should not be made for money by individuals. It turns it all into a illegitimate business and attracts unwarranted attention from companies and the law. It will only drive emulation into the ground.
With that train of thought, needed-for-life basics like food-creating activities shouldn't be made for money by individuals, and medical activities shouldn't be made for money by individuals, and many others. I don't see why it is illegitimate to create a business out of "retro activities". Or would you consider the GBA port of Speedball 2 to be an "illegitimate business"? are Disco Music compilation CDs illegitimate business? What about DVD re-releases of Star Wars? I know this wouldn't go with you "unrelated individuals" argument, but after so many years, and so many hands passed on licenses, who is unrelated?
About emulators only mimicking hardware, you shouldn't put it in such a despective way as if the emu creator done nothing. It's real HARD WORK specially when specs are not available and the coder is out to reverse-engineer it from scratch. You know how much I preffer the real thing, and I don't like using emulators because to me they are a much inferior experience, but credit where credit is due, and making an emulator is not an easy task, at all, and needs lots of WORK to be put on it. and if someone decides this whackload of work is worth a few bucks, fine by me.
I do stuff for free and I do stuff for money, but my situation doesn't allow me to do much stuff for free right now, unlike when I lived with me parents and had barely no work. Today I have a house to maintain and a business to take care of. That doesn't mean I'm now charging my friends for the work I done for them for free back then.