Oh man, this is definitely good news. I'm optimistic because all they really need to translate are the menus and a few lines of text in the tutorial and at the ending. That's really it. Once it is in VC format, there's no excuse for it not to happen. The game was slated to come out in North America after all until Conker bombed and the N64 era was over.
It's ironic that this was reported today. The subject of N64 games came up this morning while talking to a co-worker and he asked me what my favorite one is. I replied no disrespect to the excellent Zeldas, but Sin & Punishment is my favorite hands down. It really is amazing and I still go back to play it every so often. The levels are so memorable and crazy. It's intense and a blast to play--everyone needs this game. A $10 purchase price on VC is a steal.
Awhile back I read an interview with one of the guys who made S&P, who said something along the lines that Treasure would love to do a sequel to it, if only the game would get a little better recognition... For S&P to hit VC and then spawn a Wii sequel would be a dream come true. Jonny's right: the game's shooting and sword fighting would be a perfect fit for the Wii remote.