It says consoles allowed are PS1 and PS2, but it doesn't say Emulator. It also doesn't mention that it's banned are anything else. FF8 says emulator is allowed, but won't complete WR. So what does this mean?

Looks like it's all kept under the tab called: "https://www.speedrun.com/ff7#PSX_Digital"

Each tab, and each sub category can have their separate rules that only show when you select rules while viewing that particular leaderboard.