Custom firmware allows the best of both worlds [Update 1]
Super-programmer Dark_AleX continues his amazing work on the PSP by releasing a "Special Edition" firmware that combines 2.71's functionality and 1.50's homebrew compatibility. It's not the easiest process in the world, though (and it won't work on TA-082 PSPs). You'll have to create a DXAR file, and copy some complicated-looking files around. Once you install the custom firmware, you'll be able launch homebrew from the XMB, run ISOs, and legit games too. It's like having your cake, and eating it too.
[Thanks bumpi, Via PSP Hacks]
[Update 1: An easy installer has just been released.]
