I have found and reported a few bugs blocking some Win16 applications to run under Wine. It is ofcourse more difficult for developers to adress those issues nowadays, but on the other hand is the OS much smaller than the current versions so a 100% re-implementation should be possible. I think it would be great if some more effort would be put into the Win16 compatibility of Wine.
At work, we had some fully working machines where the controlling software was built for Win16, and when the machines had to be replaced by Win95/98/XP machines it all became completely unreliable (crashes claiming "not enough memory"). It is sad when very expensive and fully functional machinery (in this case a CytoFluor 4000) gets unusable because of something stupid like that.