Now we're getting somewhere. A native NES Emulator for the iPhone has been released.
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A Youtube video demonstrating the application is available. Appears a little slow at the moment, but certainly functional.
According to the release notes: "Presently there is no sound, and the emulator is a little slow (most likely due to the way I'm drawing onto the screen). And the control is a bit iffy (using an image of an actual controller, while cute, sucks)."