We have a very strong argument that Dolphin is not primarily designed or produced for the purpose of circumventing protection. Dolphin is designed to recreate the GameCube and Wii hardware as software, and to provide the means for a user to interact with this emulated environment. Only an incredibly tiny portion of our code is actually related to circumvention.

That doesn't sound like a strong argument to me. I'm a supporter of emulation but I think that the amount of code involved in making it happen doesn't stop it from being the primary purpose.