I guess this hangs when launching BC, which is title 00000001-00000100. Since it would be pointless to try to emulate the arm cpu, we could HLE this.
On a wii BC and MIOS(00000001-00000101) work hand in hand. BC basically gets the wii into gamecube mode, and then starts MIOS. What Dolphin should do would be to skip most of that and launch the gamecube ppc executable embedded in MIOS. This should be done as "gamecube homebrew" with the inserted disc as iso. For correctness, somebody should also look into sram changes the system menu tries to do here.
However pointless and useless this looks, this would have one actual use:
Run custom MIOS. This is where i start bugging people about neogamma again: With the correct custom MIOS installed to the nand, and neogamma, it would be possible to run gamecube games with ocarina codes, with the gecko os hooks, instead of Dolphin's hooking. That should fix button activated codes in theory, but there also could something else wrong with those.
PS: For this(neogamma + gamecube codes) to work, the memory must not be cleared, or at least parts must be excluded from clearing. The wii part writes an executable and options into memory, which are read after the custom MIOS is launched.