Earlier quoted context omitted.
You absolutely aren't copying the work, recompilation projects are intensive work and a re-imagining of what the source code could look like. Compilation is still a one way process. And then for the legal part, that's why it's called an exception.
There is little to no creative work whatsoever if you end up with exactly the same game; and often they end up with exactly the same binary as well. Source translations are derivative works almost by definition. It doesn't matter what magic you use to generate it. And again, where is the interoperability here? Interoperability exception would apply if there was whitebox cryptography, Nintendo logo-style things or any…
And then for the interoperability, these decompilation projects are primarily made to target other systems, not the original platform. That's the textbook definition of interoperability.
Let's be real, N64 and the PS1/PS2 (where most of these projects are based) are crumbling old platforms at this point and these projects are sometimes the best way to run games when they exist.