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It detects any instruction fetch access which includes prefetches, it does not (and can't) know if CPU "uses" the fetched opcode word.
68000 + more compatible mode has extra checks to detect some branch-like instructions (mainly RTS/RTD/RTE/RTR and BRA.B). It possible to add same support for 68020+ more compatible. If more compatible is off, it should also disable prefetch emulation.
Memory size shouldn't make any difference as long as all memory is inside first 16M (24-bit addressing).
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