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would i be able to use Python with C for bottlenecks in place of Java?
Sure, that's an option as well.
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I'm guessing that I'll have to use Java
Why? What pushes you towards Java?
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would it be able to handle running the majority of a server emulation with some C for the really heavy lifting?
Depending on the scenario. Well, you have to consider how it's being used. EVE Online: MMORPG. Google uses it. Then there's the Python frameworks like Twisted and CherryPy which implement very fast servers. So it's been in use for serious work under heavy loads.
I know what you're trying to get at with your questions. When it comes to really high performance work, you're dependent on C extensions and seriously well developed third party libraries (i.e. tested to scale). Thankfully, Python does have them.
If you're writing a server emulator, I assume you have the technical background to do your investigation. If your question comes down to "Is Python a viable alternative" the answer is a definite yes, but you'll have to look at your own knowledge and comfort with Python. Same goes with Java. I'm far more comfortable working with Python, and have a bias, so take my advocacy with that caution.