Based on the yesterdays NFO from PDX they clearly state that the hardware in the Euro release PS3 is causing there process not to work. The only hardware difference that I know of is the removal of the PS1/PS2 chip as seen in this post from the news back on March 14th:
Concerns regarding PS3's backward-compatibility have been raised since Sony announced European consoles would use software, rather than a dedicated internal chip, to emulate PSone and PS2 titles. This reduces the number of backward-compatible games for EU PS3s significantly, compared to the approximately 98% playable on American and Japanese machines.
I have no experience reverse engineering or developing, but to those that do I truly believe that this is where PDX was saying they found the exploit. Maybe they figured out a way to trick this chip into running an iso from the hard drive or external drive instead of a PS2 game in the BR drive. Maybe someone with more knowledge will shoot this theory down, or know of some other hardware changes done in the PAL units. But in my opinion this is the area to look at.