That is indeed weird. Both the emulated and the simulated netboard use TCP which blocks until it receives data; as far as the emulator is concerned data always arrives on time regardless of the actual latency. If the network latency is too high then the game will not run at full speed, but other than that it should theoretically work the same.
There is a check for connection to localhost but this is only to detect when one emulated machine is linked to itself; it should have no effect with multiple linked machines.
Tomorrow I'll put together a 4-player network across 2 PCs myself and see what happens.