A lot of this the best way to answer is to simply try it yourself. There are atari emulators out there, just google search or use altavista. The DOS emulator doesn't run VGA, so no you can't simply play any old dos game. The emulator's homepage would have much more info on what you can run, mostly old CGA games. The current emulators run fine on Xscale, there's no incredible need for Xscale based versions, and as such there probably won't be for quite some time if ever. Emulation and other projects like this isn't about support, it's about what the programers and people working on the project want to do with their time. Nearly all 3rd party memory will work fine, though you may have problems with the mega-cheap brands simply because they're mega cheap cards. CF is usually cheaper than SD. I'd imagine the capcom games would run fine... ARM is fine usually. Try to find demos to be sure.
Simply put, explore. It's more fun that way.
