You might not believe it but the current emulator Sony uses for PS2 Classics on PSN has just been opened up for people with hacked PS3s to finally support ALL PS2 retail disks, compatibility was expected to be patchy but it seems people have already got top tier graphical games working perfectly with no slowdown (Final Fantasy X). I've done a couple myself, MegaMan X8 working perfect as was as Kingdom Hearts 1 and 2.
This is NOT using any BC hardware - it's a purely software emulator that runs on PS3 slims and fats, and is what powers "PS2 Classics"
Check out ps3hax.net for those interested.
It looks like around 70-90% of all PS2 games will be fully functioning.
I'm a regular on ps3hax and help out a fair bit and when this dropped a few days ago people were expecting an abysmal compatibility rate, of around 20% or less, now it seems that this is a fully functioning emulator...
Why hasn't it, and why isn't it being released?