Your alternative was to run videos that looked crappy, which was a shame for such a beautiful screen.
Well, all that is old news. 480 x 272 resolution videos are officially supported on the new firmware 3.30. Surprising move for sony. I guess they have given up on the umd disc movies. i never understood the concept of that. charge double the price for half the resolution (in other words 1/4 the video size), and not make it useful in any other device.
Shortly after this news, I realized that there is a hacked firmware out there that is the mother of all firmwares. It lets me boot backups of iso's without anything like devhook or run umd, lets you set screen to the brightness you can only select while plugged into an adapter, plays all UMD games from the disc, and best of all, it played videos at full resolution. Same resolution and format you can use with the new 3.30 firmware. One last thing I think sony should do is offer the full brightness setting with or without being plugged into the wall. Its ridiculous. The battery is good enough for a few hours of content. More brightness the better, especially in well lit areas.
It literally took about 18 months of waiting since I bought my PSP to finally become the device I always wished it was. Its about time. I guess I'll start carrying this thing finally.