It would be interesting to see someone try and produce a Saturn cartridge which would then allow a Mega Drive cart on top. Similar to the power base convertors that allow Master System games to be played on a Mega Drive. I don't know a whole lot about the Saturn's hardware, but isn't there a Motorola 68K handling the sound? Is it even possible to get it to act like the Mega Drive's? Even if it wasn't a success, I don't think I've seen anybody even try (which includes gutting the whole machine out and replacing it with some hybrid PCB or whatever.
I would think the easiest solution would be to just use a Megadrive clone hardware and have the cart slot be a sort of video pass-through or such - similar to GB devices on the Playstation and whatnot. Of course, then you'd have to deal with the issues of cheap Megadrive clones.
The Megadrive already had the full SMS hardware inside, the Power Base converter only acted as a passthrough for the different cartridge slots. To make something like that on the Saturn, you'd have to include the full Megadrive hardware in a converter. Doing that would've been economically unfeasible. It should be difficult if not impossible to use the 68k to one-on-one emulate the Megadrive 68k. Even if it was possible to do it, it would be even slower than a complete software emulation.
I don't think the ports would line up exactly, and I don't think the Z80 or the PSG are present at all, so it may be an excellent experiment in virtualization.
Yes, it would take a lot of dynamic compilation to make the Saturn 68000 play Genesis games - almost as much as a full blown emulator. At least you'd be translating 68000 code into 68000 code. You would simply be replacing read/writes to hardware with subroutine calls. If the rom exceeded the size of the Saturn audio ram, you would also need calls to swap memory in places. That would be the really tough part. I could see someone doing this with specific games, but not as a generic MD emulator. More likely would be a cart that was based off one of those myriad ARM SoC Genesis emulators like Kiddo above mentioned. Take a GenMobile or RetroGen to base it on, rip out the main board, add a rom for the Saturn side, and a couple ports the Saturn could write to for faking the joystick ports, and reset button.
The only Mega Drive hardware in it is the 68000, nothing else, and it has a completely different mapping I think, so that's the same as nothing in practice. Forget it without making a full emulator, period. You could make a passthrough to let a Saturn program to read data from Mega Drive games, though... Although beware of timing issues.
OK, bumping this with a question that I'll likely never get answered: Does anybody here own a Saturn manufactured by Sega Logistics S.? These were the only in-house produced Saturns, manufacturing was outsourced to other plants for the entire run of the console.