This would be a direct continuation of the PS2/PS strategy. The IO controller on a PS2 is pretty much exactly a classic Playstation, implemented on a single chip. This allowed the PS2 to play all PS(one) games, even those that bypassed the libraries and made direct use of the PS hardware.

Doing this on the PS3 would avoid trying to emulate the MIPS R4000 of the PS2 in the very different CELL (PowerPC based).

This is all very true, but Sony is getting raked over the coals concerning the cost of the PS3. At this point, it stands to reason, that it may be wise to look at ways to cut costs without sacrificing future performance.

Personally, I think backwards compatibility isn’t the wisest investment. If I had a whole whack of previous generation titles for said system, why couldn’t I just play them on the console that I already own. Why is it such a huge “feature” for a next gen console to have backwards compatiblity?

I like the backwards compatibility of the new systems I don’t have a PS1 or PS2 so that saves me some money. If this is true that the PS3 has the PS2 chipset I fill like I am getting a better deal when I got my PS3. I just hope that what Im hearing is not true, the graphics is worse on the PS3 than on the PS2, playing PS2 games of course. I’ve not been a big fan of Playstation untill now. If people would just think of what is in the new PS3 they would realize it’s a good price. Blue ray, cost $1,000, WiFi for internet on 60GB it cost $100 for the X-Box 360