Why not? We live in a world where the latest processor from Intel still boots into 16 bit real mode, and we have emulators and virtual machines.

There is a real cost to supporting old architectures and associated risk in telling users they can run production workloads on them.

There is also a real cost to dropping support for software working perfectly fine.

When a big company explains away how they are not doing something because of engineering resource constraints, put your skeptic's hat on, it's likely an exaggeration.

You can still use emulators on macOS Catalina (the version that drops 32-bit support.)

Aside from the noticably lower memory usage due to smaller pointers - Microsoft found that x86_32 is the lingua franca for WoA emulation. If all the binaries are x86_64 and there are legal problems emulating it, there might be problems switching Macs to ARM CPUs.

> and an emulation layer is a legal nightmare

It really isn't. And Apple can win that fight even if Intel tries to cause trouble.