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The audio processing is a perfect job for running on the ME: it's asynchronous (i.e. daedalus can be processing audio lists on the ME while emulating the n64 cpu on the main PSP processor), and the jobs are fairly self contained (so I can essentially just set up a single chunk of memory for processing on the ME, rather than having to synchronise lots of separate data structures). Potentially I can move all the display list processing to the ME too, although I suspect this will be a lot more challenging.
The problem at the moment is that I've not yet spent enough time investigating the ME in much detail, so it's hard for me to estimate how much work is involved. Once I've got this release out of the way I'll have to spend some time playing around with the ME :)