How does this battery simulator work?
there is no path for that current to go through R8


There is a path through R9


  What am I missing?


The negative feedback.  Only a small amount of current from right to left through R8 will turn on the op-amp and MOSFET which will sink almost all of the current from the charger leaving just enough current through R8 to generate the appropriate control voltage.  This is how feedback loops work.


  The forced current of 250mA would generate 50V on R9


This can't happen assuming the op-amp / MOSFET circuit is operating correctly.  Look at this way, if some small charge current is through R8 (right to left) there must be some much larger current through the MOSFET.  Thus, it can't be the case that all of the charge current is through R8 (and R9).