> I don't know how kvm-pr works exactly but it'd be mighty
> silly if it would somehow restrict the emulated CPU type.

See comments #149 and #161. KVM is not about (slow) CPU emulation but about (fast) CPU virtualization. With Power(PC) on Power(PC), KVM-PR lets user mode instructions be run directly but emulates supervisor/privileged instructions, as explained here and there. However, this only works with Book III-S on Book III-S (called just 'Book III' in PowerPC ISA and again as of Power ISA v3.0+), not with Book III-S on Book III-E (called 'Book E' during PowerPC ISA era), not with Book III-E on Book III-S, and interestingly also not with Book III-E on Book III-E.

> if the kvm-pr can't emulate a MorphOS compatible CPU it won't work.

It can, see link in comment #174. The issue lies elsewhere.

> Pegasos II machine emulation doesn't give you any better options regarding this. […]
> I see no way how Pegasos II machine emulation would improve the situation there.

See above.