Sony's plan of counter attack
Since all ps3s are open for linux and custom firmwares now, sony can only minimze the damage that really affects them - namely, online cheaters and piracy of new games.
This is what they'll do:
1. make new keys for level 2 application code. use random k value this time for each signed binary. Since GameOS (and other stuff) runs at level 2, there is no need for a whitelist of these code. the new firmware will run a new version of GameOS(w/ new encryption) and only the new gameOS.
2. make new keys for games.
3. create a huge whitelist of all games and apps. This will done via a encrypted database of all games across all 3 regions. There are maybe like 2000 games per region. Maybe 6000 in total. a hash value of the encrypted exes would certainly be less than 10 megabytes. once a user puts in a game into the ps3, the ps3 hashes the exe, compares the hash value with what it has in the database. If it passes, then decrypts and executes the game in gameOS.
4. for all new games and apps, sign them with new keys
5. implement all the security deficiencies exposed by failoverflow - hypervisor needs to do more than virtualize OSes, it needs to protect against buffer overflow attacks, verify exes, etc..
This thing is, Sony has to do all this in one new firmware update. If they only the part of this in one and then another, everything again will be compromised.
I expect modchips to come out that on the press of a button, automatically downgrades the firmware to play pirated games and on a 2nd press, reenables the new official sony firmwares for online access and for new games.