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.
what's being circumvented here is the encryption of Wii games. the primary purpose of Dolphin is not to decrypt Wii games, it is to emulate them (in other words, make them interoperable with PC hardware, as pointed out later). the circumvention of encryption is a necessary part of emulation, but it's not the primary purpose.
I agree those arguments have no legal ground, but I don't believe emulators are made with the primary purpose of circumventing protections, it's just naive to think people wouldn't use them for that purpose IMO.