Alright. I was messing around with my PSP yesturday, and using File Manager, I was able to run an EBOOT without having both folders. I had deleted the Bejeweled% folder, and ran the larger EBOOT in the regular Bejeweled folder, with no Bejeweled% folder present! If anything, doing this, we can save some space on our memory sticks.
EDIT: Scratch that, I just tried opening SNES, and my PSP just went black, and shut down. Eh, it was worth a try. This is worth some looking into, though.... Homebrewers, take note of this!
Also, I think that the key is not downgrading. Somehow, we need to make Apps appear as signed code to the PSP. That does seem like the only viable solution, to me anyways. I don't know how probable this is, though. Maybe, with those UMD dumpers, someone could dump a UMD they own to their MS, and somehow examine the code, and find out what makes it appear as signed to the PSP. Again, I know nothing about this sort of thing, just throwing something out there. I am not promoting piracy. :)