my friend's KH2 disk crapped out on me when I got to the Pirates of the Caribbean level, not letting me get past a certain cutscene, then outright refusing to load my save after a trip to gamecrazy for disk cleaning so when I got my new computer, I tried it out and surprisingly enough, it worked fantastically (even when reading from the same disk that no ps2 that I tested could run), allowing me to run through the entire game with very few problems. I have a 2.8Ghz core2duo and very rarely did cpu utilization reach 100% (pretty much only in twilight town, which made going through the roxas part that much more grinding). Slowdowns occurred somewhat often (usually not dropping below 48ish fps) independent of cpu usage, and seemingly of any other component as my ram usage never reached the full 2 gigs and I saw no speedup when changing my graphics card from an x1650 (weaker then OP's card) to a 4830 (more powerful then OP's card).
Overall the experience was quite enjoyable and the small slowdowns I would say are worth the vastly increased image quality.
EDIT: I would like to add that this is a nice way to play ps2 games in a (mostly) legal manner without a ps2 since the emulator can use normal ps2 disks put in your cd drive. The only questionable thing is copying the ps2's copyrighted bios, but I don't see Sony taking anyone to court for that.