It seems like the App Store reviewers have been smoking something once again and this time it's the no emulators rule that goes up in smoke. Nescaline is a full-featured NES emulator. It comes with five homebrew games and lets you add any other NES game by adding its rom url.
The app is developed by Jonathan Zdziarski, a world renown iPhone security and development expert, which could explain the preferential treatment.
It's $7 and if you want it grab it fast as this might not last.
***Update
Yep, as you all noticed, it has already been pulled, too bad.
