Yes, it seems that somehow Sony has managed to do it somehow. I find it amusing that they have to study the exploits developed by the PSP Hacking community.

It’s my opinion that if somehow they could enable homebrew software on PSPs and restrict some things (like loading ISOs) it could perhaps save the PSP from being the pirated console to have at the moment.

Here’s what a PSP firmware master had to say:

As it stands i’ve taken the better part of the past 5 hours analysing
things, testing various methods for both my retail umd and my on
personal iso dump, and i’ve come to the following conclusion.
GTA:LCS REQUIRES the v2.00 firmware to operate, both the eboot and
prx’s are encoded in v2.00 fashion, this means that no ammount of file
swapping or ‘patching’ of the boot.bin, far short of recompiling the
original sources from scratch, is going to make a shred of difference,
because the v1.50 firmware simply cannot execute or run v2.00 encypted
data.

This leaves only 2 possible choices :
Upgrade to 2.00 and play the retail game
Someone (im looking at you humma), gets firmware loading nailed down
solid, allowing the complete v2.00 firmware to be loaded up with the
umd, or iso set in memory to load, it will then execute from either umd
or iso without any issues.

This
is far more than just differently encoded video or audio files, every
bit of the code has been compiled and encoded for the v2.00 firmware,
and as such until a way to successfully load the v2.00 firmware without
issue arrives, only those owning a v2.00 psp and a legitimate copy of
the game, will be able to play GTA:LCS.

Great work sony, i must say.