Can anyone here help me out?

@haagens you can try to emulate lv1 by just trying to install yellow dog linux (free and legally available), if you get that running (you're going to have to do a lot of work, implementing interrupts and other low-level things we didn't bother with) you will have most of the work done. Then you "only have to worry about lv0 emulation for the hypervisor".

Yes, can't believe I forgot about Yellow Dog Linux running on Cell! Thanks!