A lot of PS2-era games unfortunately used various self-modifying executable tricks to swap code in and out of memory; Naughty Dog games are notorious for this. This got easier in the Xbox 360 and PS3 era where the vendors started banning self-modifying code as a matter of policy, probably because they recognized that they would need to emulate their own consoles in the future.
The PS2 is one of the most deeply cursed game console architectures (VU1 -> GS pipeline, VU1 microcode, use of the PS1 processor as IOP, etc) so it will be interesting to see how far this gets.
Ah - so, not full-on runtime code generation, just runtime loading (with some associated code-mangling operations like applying relocations). That seems considerably more manageable than what I was thinking at first.