though what you are suggesting is just a JIT, that sometimes spits out the instructions unchanged.
*cough* Dynamo-style JIT *cough* ;-)
Dynamo (a JIT made by Hewlett Packard) demonstrates the amusing (and at first glance ludicrous) fact that a hotspot JIT can 'emulate' code running the same processor it itself is running on faster than the CPU can run code natively.
The reason this is possible is down to the fact that at runtime you know more state information than you ever did at compile time. Consequently, a lot of if/else/switch/case/for/while etc code ends up taking only one or two possible paths at runtime (compared to many more possible paths at compile time) and unused code paths can be optimised away by the JIT.
The main overhead of any JIT system is the on-the-fly recompilation stage that's kicked off when the system encounters new code. Translating code for one CPU to another can be quite expensive where their architectures are very different. However, when most of your "recompilation" involves simply copying (rather than translating) the original code, that overhead is mitigated substantially.
Using such a mechanism, I expect a current generation coldfire core could run 680x0 code extremely well and without any of the performance problems trapping individual unimplemented instructions cause.
If only there were 24 more hours in my day I'd look at it.