"Non-converted videos" doesn't mean much, the XMB already squeezes the best out of the hardware including accelerated decoding (and standard resolution mpeg-4 part 2 or part 10 in the avi or mp4 containers are hardly exotic formats, although the fairly low limit on maximum bitrate and [dimensions divisible by 16, iirc] can catch you)
There seems to be an ancient homebrew called "PSP Mod Play" that does exactly as it says on the tin (if you have a CFW like ME or plugin for backwards compatibility with homebrews designed for 1.50), and nothing more really