I have a ps3 firmware 3.50 and teensy++ 2.0. I downloaded and programmed psgrade teensy++ 2.0 16mhz hex file onto it and it booted my ps3 into service mode fine. I then proceeded to follow all steps, format usb stick to fat32, put in lv2diag.self and modified 3.41 PUP into the root, and proceeded to downgrade as instructed.
Thing went wrong and it got stuck at the final step, green light keep blinking for a very long time. I had to turn off manually and restart, but then it became semi-bricked and won't turn on. I had to go into recovery mode and reinstall official 3.50 firmware.
Basically now it's a fresh 3.50 install and it won't go back to service mode anymore. I tried variations of timing of power + eject press but no avail.
Fixed the service mode by reprogramming psgrade again. However PS3 still hang at last step of downgrading with green light blinking very long and not shut down.
my ps3 is a the 40gb discontinued model.
edit2: trying to downgrade again this time it's fubar and I can't even get it into recovery mode. It just turn off after the 2 beeps.