@itix
I can only speak for myself really, but compatibility is good. The only problems I have had are with applications that try to determine which CPU is being used in underhand ways (ie bashing supervisor mode only regs etc).
Most apps I have tried seem perfectly OK. Anything that doesn't specifically need higher than 020+68882 works fine. Proper OS3.x/RTG stuff runs a treat.
On the whole, it seems a bit faster than my actual 68040 for 680x0 code intensive stuff, but obviously gets faster the more ppc native OS calls are made. This is still using interpreted emulation here, so I can't say how fast JIT is.
@ksk
I haven't encountered any problems with AGA software (so far) - after all an A1200 has real AGA chips in it. But I haven't ran much native chipset stuff either. Still, good old deluxe paint runs a treat!
Whilst I wouldn't recommend running the OS on an AGA screen (same goes for 3.x too) it does work ok, especially if you don't go mad with the GUI preferences :-)