This is the most convenient method as it avoids creating massive duplicate files on your hard drive.
Sony’s "Fat" PS3 models (CECHA/B) had actual PS2 hardware. Later models used software emulation, and the Slim models had no PS2 support at all. The DKEY, using a payload called PS2_Emu , unlocked the hidden PS2 emulator inside all PS3 models. While compatibility wasn't perfect (issues with texture rendering and audio sync existed), it was the first dongle to allow a PS3 Slim to play Shadow of the Colossus and Final Fantasy X from ISO files.