What Reeves meant was disk swapping to play Singstar PS2 songs on PS3.
What SONY will do to eventually add PS2 BC to newer PS3 models is create GS(PS2 GPU) emulation. Currently I imagine that the RSX should be able to handle most tasks the GS does -- it however does not have the 1mb video RAM embedded in it, which the GS has.
Once SONY manages to solve this problem they will then have to deal with PS2 games which do not 100% conform to PS2 development sidelines.
After that SONY would need extensive testing to be done on 60gb, 80gb and 40gb models to ensure that the Firmware doesn't hurt any of the older models of PS3 ... and after all that you would properly get 600 - 800 PS2 games working... or about 50% of all PS2 games...
I have no doubt SONY is working on doing this. However i also believe that SONY sees this as a minor issue and wants to get new features out first, as such i wouldn't expect any PS2 BC on 40gb models this year ...
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