The central problem with a properly-compiled native TECO is that the current version is written in absolutely awful spaghetti Macro32. Macro32 code is really, really bad. It would be far less effort to just rewrite Teco in C than fixing up the Macro32 so that the Alpha Macro32 compiler would accept it.
VEST really is a compiler, albeit a rather strange one.
TECO is not running in emulation, nor do Alphas have any special hardware for VAX emulation, like the old PDP-11 compatibility mode on the VAX which went away with later models.