Check this out on PSU.com "European PlayStation fans were bickering when Sony announced that the legacy hardware (PlayStation 2 Emotion Engine) was being removed for the European launch of the PlayStation 3 console. They were afraid their favorite titles wouldn't be compatible with the system. Luckily for them, Phil Harrison recently confirmed that the PAL/Euro version of the PlayStation 3 currently supports over 1,200 compatible PS2 titles, with more to be added to the current list before March 23rd. This will be via a firmware upgrade to 1.60, as the consoles were shipped over 4 weeks ago (and obviously aren't updated with the latest firmware). The software emulation also allows for select titles to be upscaled to 720p/1080i, and will receive constant updates in order to support more PS2 games. It's looking like the new method of backwards compatibility is looking to be more of a bonus than a handicap." -PSU.com Granted PSU.com is somewhat of a fanboy site, I have found that they are pretty accurate in their news reporting. I am anxious to see what select few titles support the upscaling. There are several ps2 games I would still like to play, but they just look so jagged.
PSN ID: redsock
