It can be done. I remember I tried it during my gap year so it was literally 10 years ago (meaning that it might not work with current CFW's...).
IIRC, you set up a server in your PC, pointing to the directory where the ISO's are stored.
Then you configure the client in your PSP. I think I remember the client being integrated in IRShell, so you would edit one of its config files, giving the server's IP.
Then you would have the content of the server's directory under the "wlan0" filesystem; this way, you could navigate to it from IRShell and run the ISO's inside.
The concept itself is pretty much the same as running the ISO's over USB (just using the wlan0, instead of the usb0 filesystem).
However, just like with PS2, the loading times are not good enough for streaming in many games, so expect choppy FMV's. I remember I tried it with Start Ocean - First Departure and sure enough, it took some time to load, and struggled through the opening cinematic :/...
Regards,
~Sky