Errr .. yeah .. totally ...
I'm running CFW on my PS3 so I can play my bluray rips across my network.
There are game managers that can rip your PS3 Game to the HDD, and then mount the game folder on the HDD/portable and play that without that particular game title disc in the console. I know, because I've done it with my games - and I just leave one (crappy) game disc in the drive perpetually.
I can only assume that games are now being ripped (using the PS3 console), dumped/ftp'd to a PC, packaged up & exchanged (ppirated) on the internet.