Like I've said before, the PSP has low software sales simply because people aren't buying it to play games, not because of how easy it is to play isos.
This kind of thing went on like crazy with the PS2 and Xbox(there's even a book entitled Hacking The Xbox, and you can mod a slim PS2 with tape and kleenex or play-doh), and yet neither of them had such dissapointing software sales. As someone who's been modding/hacking consoles for over ten years, I can honestly say that it's easier(and cheaper) to do this with the DS than it is with the PSP, it's just that people who do this will prefer the PSP because it has more capabilities when it's hacked.
The PSP was simply marketed as an all-in-one multimedia device first and a gaming system second, and that's what people are buying it for. The people who are buying it because they can hack it probably wouldn't have bought it if it weren't hackable, so while an unhackable PSP would have a higher attach rate, it would still have about the same amount of software sold.
If this kind of thing were truly responsible for lower sales, then all of the record labels and movie studios should have long ago filed for chapter 11 considering that an artist's entire discography and/or a bunch of movies can be downloaded within mere hours.
The Dreamcast had low software because people simply lost interest in it as it was killed by the announcement of the PS2, not because of people playing burned games on it. In 1998-2000, nearly all computers shipped with just a CD-ROM/DVD-ROM drive, and 4x/8x CD writers still cost about $350. Also, the vast majority of people with internet access were still on dial-up, and P2P services like Kazaa, Morpheus, Emule, and Bittorent did not yet exist, so not only were DC isos a lot harder to find, they took for bloody ever to download.
