Zero-Mare, you're almost right. ePSXe is a PSOne emulator, considered finished a while ago, which has almost flawless PSOne emulation on not too powerful computers. The same crew is working on a PS2 emulator, which sounds like what you're thinking of. They can get a few games working but the requirements are still wicked and they haven't gotten gamepad support or widespread compatability yet. I use ePSXe though, and I can buy/download any PSOne game and play it either as a CD image or straight from my CD drive.
Check it out:
http://www.epsxe.com/news.php
http://www.pcsx2.net
EDIT: And I'm wondering if the emulator will simply use PSOne CD images like you use for ePSXe, or special versions that Sony releases, or simply UMDs with PSOne games on them. I'd buy them either way, but UMDs are expensive. The thing is, you'd only be able to fit one or two games at the most on the 1Gb memory card in their current form so I wonder how they will handle it...