And you know this because?
There are too many differences between the Windows and PS2 versions of FFXI for it to be simply emulation. Projection shadows are higher resolution in the windows version, certain ingame effects are quite different (avatar glow effects and the on screen battle message animation immediately come to mind, some magic effects are a little different between the versions also) Weather effects can be toggled off in the PC version. And the recent addition of buttons that automatically scale with resolution all point to FFXI on Windows not being simple emulation.
I do know that some things that could be done with shaders in DirectX 9 now were done with software because DirectX 8's fixed function shaders weren't as powerful and flexible as the PS2's vector units. Shouldn't be too hard to just replace that code with Shader Model 3.0 code though.
It wouldn't really be hard to create am HD client for FFXI on Windows and 360 using Gamebryo Lightspeed or whatever. These days you don't have to build a game from the ground up, you just license an engine and over 75% of the coding has been done for you.
The thing you have to remember about an MMO is that most of the important stuff doesn't happen on the client, it happens on the server end. The client is just a graphics terminal that shows you what's happening on the server (in FFXI's case, as with many MMOs it also handles your character's movement). There's no technical reason why they couldn't make an HD client for Windows and 360 while retaining compatibility with the PS2 client. Without memory limitations annoying things like lag in transferring items between bags would disappear because you'd have enough memory to cache the transfers. The 80 slot per bag limit would remain, but wouldn't really matter anymore because you could now transfer from any bag to any other bag on the Windows and 360 versions (the old limitations would still apply to the PS2 version)