GCNcrypt: http://www.mediafire.com/?3pb4n8c2a7z3mzu

Tools needed:
-The Dolphin emulator (of course!)
-GCNcrypt (check the 5th step of this guide for more information)

1.) Open "Dolphin.exe" (I'll be using version 3.0 as an example.)

2.) If you don't have any ISO's listed in the main menu, go to "Browse" and navigate to the folder containing the .ISO you wish to use Action Replay codes on.

3.) Go to "Options", and then "Configure". Under the "General" tab, make sure "Enable Cheats" is selected. This is basically the master "kill switch", so if you ever want to disable your Action Replay codes, go here and disable them.

4.) Right-click on the game in your list you wish to use Action Replay codes on, then go to "Properties". Once in the Properties menu, go to the "AR Codes" tab.

Note: Gecko Codes ( http://geckocodes.org/index.php ) can also be downloaded automatically from the Gecko Codes database (check the "Gecko Codes" tab), but there aren't Gecko codes for every game out there, and my tutorial doesn't cover these.

5.) Once in the "AR Codes" tab, click the "Add..." button. Here, you will be able to input a name for your Action Replay code (it can be anything, as long as you can understand what it is), as well as the code itself. It says that you may insert encrypted codes, but I've been inputting the decrypted codes instead, and have thus far had no issues. To decrypt Action Replay codes, you'll need "GCNcrypt". This is a free, open-source utility designed to encrypt and decrypt Nintendo Gamecube Action Replay codes. If you can't find it via Google (and, you should be able to quite easily), just contact me and I'll give it to you myself.

Note: You must enter codes one line at a time! Meaning, if your code has multiple lines of code, you must enter one line at a time. Check the video for a better explanation.

6.) Hit "OK" once you're done entering your code, and now you may hightlight it to remove or edit it. If there are more parts of your code that need to be entered, simply go to "Add..." and do it all over again. When finished, click "Close" and double-click your game from the list. As your game loads, you should notice your codes being enabled via the on-screen text.

While in game, you can go to "Tools" > "Cheats Manager" to further toy around, but you're basically good to go!


Credits:
--------
Original explanation on the Dolphin hacking/cheating function: Arch Feline of the Dolphin Emulator forum

Video/This tutorial: Leonflowen
Video music: Phantasy Star Online: Episode III - Tower of "Caelum" *Not added because YouTube enjoys causing hell for it's uploaders @_@
(Sorry for the poor video quality!)