It is not simple to create such emulator even if you have extra computer and can control packet flow. Latency is rather simple, but packet loss is not - 1% packet loss does not mean every 100 packet out there is not delivered, it can mean for example that once per 10.000 packets, 100 packets in row will be lost.
Not simple, but certainly a "solved" problem; there are plent of commercial traffic shapers, but I'm pretty sure there's quite a few free ones too (bearing in mind that linux has quite a lot of low-level features for supporting this these days, I'd be surprised not to see some).
Unfortunately, I've never done traffic shaping myself, and thigns are too hectic here for me to root around and find someone with recent experience to share; I would suggest you have a look at the "Server Dev tools" section on http://grexengine.com/sections/people/adam/gpg4/index.html
- there's a link somewhere there to a big page with hundreds of network dev tools, like sniffers and load-testers; I would guess that would be a good starting point for finding traffic shapers (although it may not have any listed - I can't remember precisely what tools are on there).