Ok, as stated the prompt WILL freeze until the backup is complete (just like how DD does, it will 'appear to be frozen' as stated) but do retry. It went back to PS3OS, as you reset the PS3's settings!
The folder name = the shared folder name on a Windows pc. (with proper permissions etc), and you need to type in the Username and Password (to connect to the windows pc defined beforehand). The list seems possible, for a future release, sure (List any .ISO in the folder!)
ad3k, I am not sure, there is only so much space to work with, any of this would need to be on a CD or HDD (which runs into other problems etc), it may be a bit beyond the scope of this specific program, but who knows what the future holds!