Reading through the rules, I noticed there's a ban on emulator-specific functions, and it says "Such as turbo inputs or savestates."

Does this include stuff like lag reduction in Dire Dire Docks? Or is that free game?

Lag reduction is fine cause theres like no way to control it

Lag reduction is fair game

i think reducing lag aint an emu-explicit thing...with clever camera-movement etc you can achieve it in DDD on actual console too

You can, but I think it's more referring to setting the counter factor in the rom settings to 1, and reducing most if not ALL lag. The camera movement in DDD is a strat that helps with console, but you do need to look at the sub at one point, and the lag will kick in when that point occurs.

for me the counter thing never worked :D

Well that's unfortunate.