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The holy grail of PSP hacks has been released tonight. You can now downgrade any PSP firmware to version 1.5 thanks to the dedicated hackers of the PSP scene.
to pull this off they actually figured out how to reverse engineer the process of putting the PSP into service mode and overwriting the filesystem with the original 1.5 firmware. The process involves changing the state of the battery and some copyright free code that does the filesystem operations. This works on any PSP even if it has been bricked or has the latest firmware. The best part is, it doesn't look like any firmware updates can fix this one.
So this should open the floodgates for PSP hacking and homebrew once again... now every single person who owns a PSP can play the great homebrew games and applications available for download for free from sites such as PSPUpdates.
It is still unknown if this method will work on the new slim PSP's, but not likely since the new hardware probably requires firmware newer than 1.5.