I've used jQuery on iPhone. Remember that Mobile Safari is not an officially supported browser for jQuery. But it's close enough to Safari that most things work.
If I recall correctly, mousedown event doesn't happen until the mouseup happens, at which point both fire. My guess is that most things will work, but you need to test everything carefully.
My experience is that changing the DOM is unexpectedly slow. Things that fly on the emulator can drag on the device. (You mentioned you'd be using emulators--do NOT trust performance you get on them.)
jQuery might be overkill. I ended up relying on XUI, which gives you a lot of the jQuery stuff, but is much more lightweight, and also gives you touch events. http://github.com/brianleroux/xui/tree/master
ppk has begun testing mobile browsers. http://www.quirksmode.org/m/w3c_core.html