Um you can play iso's, just go into recovery mode and enable use no UMD under configuration. Emualtor are easy. Download the emulator and after you extract it or open ot you are left with 2 folders called:
lets use snes as an example:
snes and snes%
take both these folders and paste them under your Game150 folder on your psp and your done
check out
www.psp-hacks.com for emulators and what not