I've been reading that this is a huge problem for everybody. This is what one guy posted.
"PS3's HDMI out only supports 480p, 720p, 1080i and 1080p. It cannot output a 480i signal from HDMI. But all PS1 and most PS2 games are only 480i . . . so what does this mean?
Basically, the PS3 performs deinterlacing on the 480i signals from PS1/PS2 games so that it can output via the minimum 480p through HDMI. However, it does a very poor job of deinterlacing! Not only are there severe combing artifacts, but there is also a built in 2-3 frame lag, the same lag you would feel if you were to feed a 480i signal straight to your HDTV.
Currently, the only way to avoid the lag is by outputting to an external scaler which can properly (and quickly) deinterlace the 480i signal. However, since the PS3 forces 480p on PS1/PS2 games through HDMI, there is a built-in input lag which affects all games and cannot be avoided. That means that the PS3 owners who paid large amounts of money for the iScan VP series will not be able to play PS1/PS2 games lag-free via HDMI, even with the "Game Mode" enabled.
The PS1/PS2 games DO output 480i with Composite, S-Video, and Component cables. However, with Component cables as you know, the Blu-ray constraint token prevents you from getting a 1080p signal. Additionally, most HDTVs can't even accept 1080p via Component.
This means that you'll lose 1080p if you go through Component, but if you use HDMI all PS1/PS2 games will have built-in input lag.
No 1080i support was one thing, but I'm in a state of utter disbelief that the PS3 cannot properly output a video signal via Component nor HDMI. Since the PS3 cannot output both a Component and HDMI signal simultaneously, the only way to work around this issue currently is to tediously change output modes in the system settings every time you want to play a Blu-ray movie or PS1/PS2 game. This is completely unacceptable and should be addressed immediately.
There are many possible fixes for this problem that could be implemented in a future firmware. Here are just a few of the ways that Sony could fix this issue:
1) 480i output could be allowed via HDMI so that users could properly deinterlace PS1/PS2 titles with seperate hardware.
2) There could be an option to automatically switch to the AV Multiout (Component) for PS1/PS2 games, while using HDMI output for other material.
or, the best solution,
3) Actually use a decent deinterlacing algorithm on PS1/PS2 titles, so that they don't lag and suffer from terrible combing artifacts.
Now, while #3 would be the best solution, it's the solution I see the least likely for Sony to actually implement because it would take actual work. #1 and #2 are simple workarounds that could be applied, but they still don't do anything about the real problem.
Once this gets out enough, though, I hope that Sony will realize the critical importance of this issue and quickly implement #1 or #2 in the next firmware update while diligently working on #3.
If you are unsatisfied with this as I am, please visit
http://www.us.playstation.com/Corpo...onsumerServices and tell Sony that this is unacceptable performance. The consumer's voice must be heard if we expect this issue to be dealt with."