The fastloader program, and newer UMD Emulator program, was made so that you can play your legit backups of your games. There are a few reasons to play your backups instead of the actual UMD games:
1. You dont have to update to play newer games
2. You use less power playing a game off the mem stick compared to playing a UMD game.
3. You set the clock speed to increase the performance of the games. (doesnt really seem to help with some games though)
4. You can take multiple games on a single mem stick.
As far as I can tell from the readme files for each application, the firmware isnt touched when running them.
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