It then run the SELF contained in the PUP. Upon that happening, there is a check against the system that verifies that the PUP matches the console (retail for retail, dev for dev, etc). If it does not, you will usually get a F029 error, however on occasion that pesky 169 error pops up too.
The issue is that there is more than one detection byte in the system, and it is a matter of finding them , and changing them to match that of a debug. Even after then, think back to the Xbox. Once you reflashed with a DEV bios- brick! Due to the different RC4 key needed to do its "magic", the system would fail. Its quite possible we could hit the same roadblock!
Finally, you mentioned you had a DEMO unit - would be nice if we could chat, I would like to take a peek at a few of the demo PKG's that the unit takes!
Well its a bit dumbed down for others, as this is the newbie area. But for starters, what the PS3 is doing is that when you change the update URL to the update file on your PC, the PS3 happily complies and continues to install it. Upon downloading it, the PUP starts to unpack. Since the PUP is still authentic (read the SHA1 signatures match the contents), it will continue to unpack it.