The reason Dreamcast is easier is because the N900 GPU is based on the Dreamcast GPU, so there should be less translation necessary - you should be able to run GPU instructions straight on the GPU.

Emulators normally have to do a lot of translations as something even as simple as running an nVidia based console on an ATI based one (Xbox on Xbox 360) is complicated, as the GPUs do not have the same list of effects or achieve them in the same way. That is why Direct X exists on PC, so that graphics cards manufacturers both know what instructions the developers are going to use and can tailer their drivers to fill in any gaps in support. Even then, PC games are designed to only enable the features your graphics card supports, consoles have no such functionality as the developers have the security of knowing that every console their game runs on will be identical hardware wise, or at least have its own built-in backwards compatibility.

Emulation is a lot easier when you design your new console from the start with that in mind. That is why early PS3s could emulate PS2 so well, but when they tried to slowly remove the hardware support ultimately they couldn't do it merely in software. Granted they might pull it off eventually, but it would have cost a lot of time and money, something homebrew developers do not necessarily have.

How does the PS1 being possible make PSP more likely?
The PSP is many times more powerful and complicated than the PS1, which is why the PSP itself can emulate the PS1. Even the Dreamcast was able to emulate the PS1, though it did take a lot of optimisation for each game that was supported.

The PSP has more in common with the PS2 than PS1. Some even argue the PSP is as powerful or more powerful than the PS2, for some things.