Yeah the PSX being emulated on the PS4 should be something of a non-effort.
Yoshida specifically said that it would be easier to emulate PS1 games than to stream them. I imagine it's the same for PS2.
In fact SD video can be around a GB/half a GB an hour. streaming more than a few hours will easily get into "more data than the game disk" territory.
That said, for any PS1 game, by the time you've played the game for an hour or two over streaming video, you've already used up enough bandwidth to download all the game data and store it locally. For most PS2 games, it would take longer, but usually not as long as it would take to finish the game.
So it may actually cost MORE money for Sony if they stream old PS1 / PS2 stuff on PS Now rather then utilize software based emulation.
The PS4 is more than capable of doing this, of course if Yoshida offhand comment turns out to be true, then that would be nice.