(Mind you, this will probably be less compatible than a software-based C64 emulator, because I doubt that the 65C816 supports the "undocumented" 6510 opcodes that some games/demos use in their mad rush for optimisation. And I wonder how they got memory banks (another custom feature of the 6510) working.)
But wait, there's more; according to this Slashdot comment, the basic design could easily be modified (by changing the CPU and glue logic) to be not just a C64 for the new millennium, but a new, improved VIC-20, or the most arse-kicking Atari 2600 ever built; or as a basis for developing your own bizarre Frankensteinian computer experiments.
The C-One aims at those who are into computer nostalgia, as well as those who want it for educational purpose. We'll supply all kinds of material for you to start VHDL programming, and instantly try it out on this board. Start modifying the board without soldering, extend the capabilities of your video output, or even switch to a completely different computer on the fly.
Update: Another page containing a lot of technical details of the C-One. Apparently (a) it's all done with FPGA chips, and people are already writing operating systems for it. (Check out the screenshots of that one; it looks like a cross between Windows 95, Commodore 64 GEOS and one of the weird, quasi-Mac-inspired GUIs that existed a decade ego.)