As a fan of retro gaming who’s never managed to marshal the time and effort required to build his own home arcade (though not for lack of peer pressure), the most fascinating aspect of the entire rigmarole is not the whack-a-mole routine, but rather the gaping market void that could be filled by the copyright owners themselves.
Nintendo, in particular, has been notable by making a complete hash of its Virtual Console offerings (which I actually bought some of for the Wii), and no console manufacturer has yet taken the time to provide a classic game library that can pass muster. Sure, it would take revenue away from AAA titles–but it would massively increase customer loyalty (as a dad, I would very much like to see my kids playing some classic games) and provide additional revenue streams for publishers.
(Also, I suspect the required engineering effort to port/emulate older games would be much cheaper than what they’re spending on legal fees right now.)