If you were trying to scratchbuild a BIOS, for example, it might be easier to have the entire world outside the CPU be emulated at the beginning. It ensures you don't end up chasing ghosts due to imperfect CPU emulation, and you can start with very simple "toy" peripherals to avoid complex setup code and corner cases, and instrument everything up.
The guy behind this had been working on some other 8088-class projects-- up to a micro-ATX mainboard intended to be roughly XT compatible. One of the side projects was a tiny character LCD panel on an ISA card, since that was an easier design for early bootstrapping than getting a real CGA card running. So this sort of fits within the same toolkit.
As the firmware improves, I could imagine migrating to a setup where the Pi is connected via, say, the ISA bus to substitute for rare/fragile peripherals, or just serving as a more easily updated PROM replacement.