I mainly use emulation as a way to have a portable Atari workstation (I had a colour laptop devoted to that purpose)
The emulators I tried worked, and some supported high resoultions, but the STs video shifter wasn't meant to shift that much video! It's emulated accurately, and when you're moving sround that kind of data the whole shebang slows down to a crawl (I ran at 800x600x4, the desktop fill pattern took 4-5 seconds to draw in!)
Lower resolutions were acceptable but didn't look as nice.
Now a falcon emulator, that would emulate the Videl chip which is way faster anyway, that would make a nice portable! Especially if it emulated the sound through the SB built in, then I could use CAF on it!!
About the best way I can think of is using MagiCMac, way down on the compatibility, but access to the native screen resolutions. I only have a 33MHz 8MB PB165C, but it would run at full speed at 640x400x8. 80MB is a bit small to work with though...
BTW - Magic 2 (Most of it was still called Mag!x) worked really nicely on my 4MB 8MHz STE. So there.