I think this is probably going to flop. The general feeling going around seems to be lots of hype and excitedness followed by clear thinking then apprehension
. I never owned a PS1 and would have totally bought this... then I read about it.
The bottom line is the Playstation was successful for its wide range of titles, not a handful of masterpieces. To offer such a small amount of games, frankly some of which are irrelevant, is such a stupid move. Of the 5 games confirmed so far only 2 are in the top 20 best selling games on the system, the other 3 don't even make like the top 100. If these are the ones they lead with it doesnt bode well for what other games are going to be announced. You just know licensing is going to destroy this, for example THPS and Tomb Raider? no chance!
This is one classic console that couldn't afford to not play disk based games. They cannot pull a 'SNES Mini' because Sony is nothing like Nintendo. Hardware wise it a cool looking little piece of kit but its a poor effort feature wise imo. Plus you could just buy a PS1, or a PS2 or a PS3...
Disk based emulation is extremely easy to do, Sony no longer chooses to do it because as you said, it sells things like this and also helps sell new games rather than fueling the sales of used retro games which they don't get a cut from.
The chip required to give the PS4 1/2 BC would cost like $5, with 3 maybe $15. Frankly if the PS5 doesn't play 1-4's games it would be pathetic because MS made it all happen to turn the XB1 around.