The update data is not redistributable, but there is nothing copyrightable in what the "fake update server" returns (30 lines of PHP serving some trivial static XML files).
Maybe the "fake update server" could have a "cache" for "reliability"?
Nintendo's lawyers are very aggressive with anything IP related, and I'm sure they would love an excuse like that to shut down the dolphin project.
Ah I see, thanks! I thought the fake update server would be returning the actual data files itself. What a precarious situation to be in though, that's unfortunate.