I'm sorry, I should have posted this information here a few days ago.
I have set up the XO as a handheld for Super Nintendo games. The tutorial addresses the issue of using the correct resolution settings, and most importantly, getting the sound working.
Super Nintendo Entertainment System (snes) games on the OLPC XO-1 Laptop:http://webpath.net/index.php?itemid=11
The instructions are for Xtra Ordinary 2010, however they should for just about any Linux-based OS.