Yes, right. All those nifty formats. Actually, that feature was originally planned to be part of the 0x89 firmware replacement/shell.
I finally got it to work and even play smooth at full PSP resolution and acceptable bitrates (not much beyond though :/). There are still some bugs left that need to get fixed and it currently doesn't support old .pmp files (crashes), but at least getting AVC pmp files too should be a matter of one or two days.
I'm gonna release it in a few hours when I fixed last few major bugs and cleaned the source to some degree.
Low-quality digicam video of it in action: