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A lot still doesn't work though, a lot of things like the elite 4, sounds, and other stuff have to be scripted, and supposedly a lot has been done over the past few months.
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Well that's because roms are only providing resources, they still have to make the actual game; just instead of ripping all the graphics, all the sounds and then recreating the levels and stuff they just grab it all from the rom directly. There are already plenty of pokemon game editors that practically recreate the entire game using rom data and then let you edit it. They're essentially doing the same thing except letting you play with the data that's grabbed. They have to recreate the engine to interpret all of said data though.
A good indication of this is how you need the SoulSilver/HeartGold rom to have a pokemon follow you -- they're the only games that have all the sprites for pokemon following your sprite.