Since all modern CPUs have a ton of microcode, would it be hard to emulate the x86 when needed, and retain backwards compatibility like that?
But I believe we're (hypothetically) talking about ARM, not x86, code.
I've never seen anything quite like it since. About the closest I've seen is the way that Thumb code can be integrated with native ARM code, and that's explicitly just a different instruction encoding, rather than a separate ISA.
So apple was working with something north of 3x the raw performance, its no wonder that most people with older macs that weren't anywhere near the performance of the 840AV thought the powermac was incredible.
Wiki for QuickTransit seems to think that a number of prominent people from Transitive hopped to ARM and Apple (which might be telling, given the claims of the original post), but has no citations.