Personally, I own two PS3s, one for CFW and one for OFW. Mainly because my 60GB Fat is getting a bit old and I don't want to stress the hell out of it by playing games on it. Loading the games straight of my hard drive saves me the paranoia of having that extra stress put on the bluray drive reading discs and getting even hotter.
I just find facepalm worthy seeing people argue about the rumored banning, saying they will buy a 360 and never buy a sony product again if they get banned like if they were entitled to play online with a modified system. I understand some wanted back OtherOS, or PS2 compatibility, but a handful of those users try warping the truth so out of the way to justify their actions (piracy/cheating).
To answer the question about XLINK KAI, you aren't connecting to Sony's servers. It's a straight LAN to LAN kind of thing. I haven't used it since the PSP days, but it should still work the same way, so it should only work with LAN games. The thing about it though is we don't know how Sony will start the banning if/when they do. I remember awhile back someone mentioned all the places Sony phones in the moment you turn on your PS3 (even if you are not logged into PSN). As long as you have internet access, Sony still keeps a eye on you.
Now I'm not sure if this is related but back before Music Unlimited came out. Sony pushed the file to everyone's PS3, I may be wrong and it may have been a firmware feature that was locked away until a certain date, but it was still pretty damn freaky because out of nowhere one day I just noticed it in my XMB under Music, when I was 100% positive there was nothing there a day prior.
Sorry about that, I didn't mean that directed towards you. I just meant it as in general, I think Sony started taking a stand on this after the new resurgence of a new CFW. I have no problem with people who cheat offline, hey I'm sure we all used to do it back in NES era, sadly though for a small handful of people's mistakes (cheating online) we all pay the price.