Firstly, when Geothingy released the Private Key recently, the web was alive with stories of Sony being smashed (actually it started before, with F0F's 40 minute presentation on how the PS3 security fell apart at their hands), there being nothing they can do, and everyone in the world can now play PS3 games (this was already possible with Jailbreak) -snip-
Now, there are CFW's are coming out, and they are running backups, but they are also bricking units (any update can brick units, even official Sony ones. Badly coded updates have a higher chance. Unforseen problems with newly coded updates can also brick units. Nobody knows why ONE particular CFW caused hundreds of bricks... less misinformation plox), and by the time you get a nice, safe, stable CFW, Sony can drop another firmware release, and the cycle starts again. (it's the same with PSP. It's the same with DSi. It's even the same with Cable in the US. At least they're not bricking consoles by the thousands.) Hardly smashed.
But then, are these CFW's that have been released recently anything to do with the Private Key? Would kmeaw's CFW have been released now, and work like it does without the Private Key release stuff? Or is it nothing to do with the Private Key episode? (I'll leave it to someone else to explain this part fully. The PK lets CFW devs sign the update, making it rediculously easy to apply a CFW over OFW or go back again. It basically lets us pretend to be Sony and install anything we want. What you do with that privilage is up to you. Most people just want to run homebrew, but plenty also want to play their "acquired" games. CFW just makes it easier to install signed/unsigned homebrew that lets us use the PS3 in ways never intended.)
Also, if its the magic key that Sony use to sign data, is there any chance of something like an ISO signer ever being released, where an 'acquired' PS3 ISO is signed, put on the harddrive, and can be played just like a genuine game put on the HD. (PS3 doesn't work with ISOs. There is currently no way to use BD-R backups. Signing PS3 games isn't needed. There was a method to modify and sign an EBOOT to make a PS3 game look like a PSN game, but it's not needed anymore. Just put the directory of the game on a HDD, either internal or external, and run the backup manager. Currently it seems like some games need an actual game in the drive to work from CFW, but it's a matter of time until that's bypassed.)
And finally, I suppose that the paid for dongle things, Jailbreak, are a thing of the past now? (It still works on 3.41. It's still got months of development behind it, rather than the measly week or so for CFW. But generally, CFW development is going rather quickly, with any flaws in it being ironed out, so all those people who rushed to buy Jailbreak devices have (arguably) wasted their money.)