A Hong Kong-based modder known as AnoRelease is claiming to have made a pretty significant change to some PlayStation 3 code, using a highly technical routine to trick a retail console into thinking it was a "debug" unit.
UPDATE - More below, but this new exploit only applies to mod-savvy users already using custom firmware, not everyday retail PS3 units.
Debug PlayStation 3 consoles are those used by developers and some press, and differ wildly from the retail units you buy in a store. A debug PS3 can, for example, install games from files downloaded over the internet (it's how in-progress or preview builds of games are often distributed).
This is why such a workaround would be of benefit to both pirates and homebrew enthusiasts. If the PS3 could be tricked into playing any unsigned/compatible code you threw at it, it'd be a cinch (a relative term considering how difficult this exploit looks) to play pirated games on the console.
AnoRelease's "conversion method" uses a lot of expert-level meddling at the very heart of a PS3 to make the switch. I'll be honest, the kind of stuff being outlined goes way over my head, and carries repeated warnings that one misstep could brick a console. But other users have begun posting clips of the workaround in action, like the one above, in which a copy of Modern Warfare 3 is run using the exploit.
Given the fact we can't verify this ourselves, and that the only "proof" thus far are some blurry YouTube videos, don't treat this as confirmation that, a year after the console's last copy protection saga, the PS3 has for certain been once again cracked open.