Well I finally got a PS3 - put in the bedroom since the 10 year old $30 dvd player wasn't cutting it anymore...what an improvement! Its weird though, the tv in there is only 720p, yet the ps3 will output at 1080p. My eyes can't tell the difference when I'm half passed out and laying in bed, but I'm guessing the 1080p output on the 720p set isn't optimal, but I'm letting it slide at the moment.
I tried the linux thing, it doesn't work as well as I had hoped. I still can't figure out how to change my screen resolution. I've done everything possible and still can't get it to display properly so I've kind of given up on the whole thing. My biggest issue in wanting it was for viewing x264 stuff in an .mkv container which is actually quite easy to do if you have the program mkv2vob, which just remuxes the file into an acceptable file the ps3 can play easily. Plus a 10gb hd video only takes about 5 minutes to convert on my pc, I can live with that.
I like it a lot though, its a great media center which is more of what I bought it for than a gaming machine, but still nice to ahve the option. Haven't tried flac yet, as I'm still using tv speakers, but I do believe tversity (the on the fly transcoding program I use) is supposed to do flac as well.