Since the firecracker isn't physically attached to the wiring of your house, I would say that the little firecracker sends an RF command just like the other wireless remotes.

Does anyone know if this explanation is correct?

The other alternative is for the firecracker to send a command that goes thru your computer and out it's electrical cord into the house wiring. But I don't really see how that is likely.

The Palm Pilot couldn't emulate what the firecracker transmit because its a RF signal.

Your palm pilot (if Palm III or higher) can send IR commands, but it is usually to other Palm pilots. If you can reprogram it somehow to send custom IR commands, I would think it's possible to use an IR543 to convert those IR signals to an X-10 powerline signal.

Just don't ask me how. I couldn't figure it out in a million years! ;)

Roland