hmm... ill try to lessen the graphics of the emulator.... but recently i played Megaman 8 with lesser lag....
This has nothing to do with the graphics on the emulator. Win2DS on the DS side receives data in form of screenshots over Wi-Fi - there is only so much bandwidth that can be dedicated for it. In other words, on the PC side, Win2DS creates a screenshot. Next, it scales it to a desired and pre-determined size. Then it sends it over the Internet or LAN to the DS. There, the DS processes the data and draws it pixel by pixel onto a Bitmap layer, which in itself is slow. At the same time, it checks for user input such as stylus movement or buttons input. Then, it sends this info via, again, the Internet or LAN to the PC. The PC interprets this input as keyboard presses or mouse movement/mouse presses.
All in all, you have a constant exchange of information. While on the PC side it's quite quick and doesn't cause issues, on the DS side, printing the pixels on a Bitmap is relatively slow, not to mention post-processing of the recieved image to even fit the screen by zooming and so on and so forth.
Practically to make this work, the PSX emulator would have to work in a non-standard resolution of 256x192, which is the native DS screen, preferably in 256 colours mode, Win2DS would have to be forced to grab only that window, for example by changing the screen resolution of the PC what in turn will cause a *horrible mess*. All in all, this has no real chances of working correctly and has nothing to do with "emulation" on the DS, as the emulation part is done on the PC. The issue here is the speed at which the DS draws onto the Bitmap and the speed at which it receives data over LAN/WAN.
There is a reason why most cutscenes on the DS are filmed in 30 FPS and with horrible quality - the process is slow from FAT, let alone from Wi-Fi.