^Cinavia is a watermark in the audio stream and is proving to be a very tough cookie to remove. Sony updated the firmware of the PS3 so that it would detect the watermark in playback and stop playback after a certain amount of time. The detection process seems to occur in the software player built into the PS3, but of course, does not happen on PS3's with earlier firmware.
But bundling another player into the PS3?...don't know about that.
It will be interesting to see what the guys over at doom9 and a few other sites come up with trying to hack the firmware though.