What are the chances of there being an Iliad emulator for development purposes?

It depends what you want to do. If you want to test your own apps, than you can run them in the developer VM using VNC. But there's nothing like an iLiad emulator that will boot up and function exactly like the iLiad.

Planning to download that tonight. I did see the one thread with something that worked kinda like an emulator.

Just wishful thinking, this thing has so much potential, but I would hate to keep messing my device up.