I'm sorry but I'm a bit confused. Are you looking to build an OS emulator or a hardware emulator or something along the lines of dosbox? In any case have you seen ultibo? a small kernel for arm rasberry Pi that supports network and threads (If I remember correctly). It does not emulate any hardware though. You could use that as your base. In any case I'm out of my comfort zone for this one.
here is the developers announcement in this forum http://forum.lazarus.freepascal.org/index.php/topic,31364.0.html
I have to check for AVR and others but for e.g. ARM (embedded), apart from generic armv5 and higher, these specific processors are supported:
Supported Microcontroller types:
How is the memory model for the embedded target? I can use an existing ARM emulator, but I need to emulate at least some of the target machine to be able to use the binary produced by FPC.