Is it possible to run a PS2 emulator through Android's DVM?
It's not a matter of Dalvik being incapable of running certain types of programs, it's a matter of performance.

Any runtime system based on non-native bytecode (e.g. Dalvik, JVM, .NET CLR) incurs some performance overhead in translating the bytecode into a form that the CPU can run.  For most apps this isn't a problem, since most apps do relatively little CPU work and spend most of their time just waiting for input.  But an emulator is typically a CPU-intensive program, so it's often better to implement it using native code, which doesn't incur the overhead of running on Dalvik.