PS3 Why Encrypt PS2 ISO?

You only need to encrypt PS2 ISOs for use with HEN; as you have a backwards-compatible PS3 you have no need for doing it. @raidriar has already covered the rest quite nicely

 

I think what you are hitting at the the emu type. You will need to use a FULL version of Rebug toolbox in order to get the most out of the full BC hardware yes.

 

That cheats are applyed as patches in RAM, and technically the same RAM patching can be made with the official CONFIG format used by the "PS2 classics" (and supported by cobra)

The problem is we dont have a tool to make the conversion from unnofficial cheat discs (codebraker, etc...) to the official CONFIG format

As far i remember there is a tool to do it in PC named "omniconverter" (or something like that), but it converts them to the PCSX2 format
As far i remember (v2) the source code of the omniconverter tool is available publically

 

Hmm, i dont know if there is some way to do it with the tools that exists, i was just theorizing

The point is most of that cheats are just 2 values... the offset (position) in RAM, and the value that needs to be written in that position

With the official PS2 CONFIG format (used by the PS2 emulators inside PS3 firmware) we can do that too, the only difference is the CONFIG needs an additional value. That value is the original value that is going to be patched

For comparison, an unnoficial patch could contain this info:
1) offset = 0x1613456
2) value (patch) = 0x0300

And to convert it to the official CONFIG format we need to do this:
1) offset = 0x1613456
2) value (original) = 0x0100
3) value (patch) = 0x0300

The result is exactly the same... but the official does a check to the original value that is going to be patched (and incase of mistmatch the patch is not applyed)
In other words... the official contains the original value that is going to be patched
Or in other words... the unnofficial patches it "blindly" (doesnt knows what is patching)

 

You can make a ISO that has Code Breaker and use cheats this way. You have to build a multi-ISO

 

The challengue is how to find the "original" value (the one that needs to be patched). The unnofficial patches doesnt contains that value, so the only way to find it is "by taking a look at that position" while the game is running and loaded in RAM

Usually this is made with a tool named PS2DIS (a playstation 2 dissassembler), it allows to look at the RAM... then you can take a look at the position indicated by the unnofficial patch and thats it... you have the original value (needed to create the official CONFIG)

Doing that in PC is not practical, is a pita and requires time, also, is not just a matter of doing it one time... the idealistic way is to do it massivelly for all the cheats that exists in the cheat discs that was published for PS2 (codebreaker, etc...) we could "extract" all the cheats from them and create a single database with everything, lol (i guess someone did it already, i think is posible to do it many years ago)

But for PS3 we are stucked in that problem because we dont have the original RAM values, im just talking about it because maybe someone have a good idea of how to do it "in the good way" (by finding the value)

*The dirty way is by patching the PS2 emulator to disable that check for the original value, i guess this way could work