Unless you plan on popping the CD into your PS3 and playing it via remote play the answer is Yes, you need to mod your PSP.
I have 2 PSPs with custom firmware for my portable PS1 gaming.
iPhone = Great gaming device. Don't agree? Who cares, because you're wrong.
Currently playing:
Final Fantasy VI (iOS), Final Fantasy: Record Keeper (iOS) & Dragon Quest V (iOS)

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