I'm more interested in some sort of PS2 emulator - That's probably going to be the main reason anyone will get this theoretical "CFW" for anyway. I'm pretty sure the PS3 could emulate any console in existance save the Xbox 360 (doubtless someone will make one just to show that the PS3 is indeed slightly better than the xbox 360 in terms of capability, you know, the whole rivalry thing xD)
I was under the impression that there needs to be quite a big difference in power between two consoles for one to be able to emulate the other. Wasn't that one of the problems with PS2 emulation on the PS3 in the first place? (The other being that the PS2 was still selling fairly well until recently). And I'm going to assume that the PS2 would be easier to emulate on the PS3 than an equally powerful system with different architecture (since they're both PlayStations). I very much doubt we'll ever see 360 emulation on the PS3, especially as some of the parts in the 360 are more powerful than equivalent parts in the PS3 (like the GPU); I mean, even PCs can't emulate it, and modern high end PCs are massively more powerful than the PS3. I'll also imagine that there'll be a lot of suing going on if the PS3 is used for Wii or DS emulation, seeing as they are both current generation consoles :3
Also, there's a very low chance that PS3 will actually be able to boot PS3 games from ISO format - not to mention that PS3 games are on Blu-Ray, meaning it's possible that they're about 50GB big - and I don't think many pirates are willing to go to all the trouble of downloading, buying an expensive blu-ray rewriter and wasting a blank blu-ray disc just to play backups, so I don't think piracy is going to be as much of an issue as it is on the PSP.
FF13 is 38GB, and it's one of the biggest PS3 games out there. In any case, that's far too much for the casual user to download with anything like the same kind of ease with which PC games get downloaded. That's 200 different rar files on rapidshit, (and sod's law says there's always a problem with one of the files), at least 40 rar files on megaupload, or a really huge torrent that Sony or the publishers would probably be able to find with ease, resulting in a lot of people being sued when their IP addresses are caught doing something naughty. Obviously, this isn't as much of a problem with PSP games, which have a maximum size of 1.8 GB, and even less of a problem for DS games, which I think are something like 64-128MB.
That reminds me of something. Why isn't piracy more of a problem for the DS?
The PSP seems to suffer greatly from it, if software sales per hardware sale are anything to go by (I think about 2.5 games are bought for every system: that's ridiculous). The DS, however, doesn't seem to have a problem. That's despite the fact that someone with a pretty crappy download speed can download a 100MB file in about 2 or 3 minutes, AND the DS is the only current-gen system can be emulated; if you want to play pirated PSP games, you have to at least buy a PSP, but if you want to play pirated DS games, you don't have to buy anything. Obviously, the PSP's different target demographic might make it more vulnerable to piracy, and the fact that the DS is a handheld system might reduce the amount of people who want to emulate it on their PC (you lose portability, although you gain a bigger screen size). I'd have thought that piracy would be a huge problem for the DS. Or maybe it is, and its sales would be even higher otherwise. A scary thought!