Only took 20 years, but somebody's worked out a way to run burned DVDs on a PS2 without relying on hardware mods or memory card/hard drive hacks.
It's early days yet and has only been tested with v3.10 of the DVD player firmware.
I haven't found any information on whether it'll work with PS1 games. The PS2 achieves backward compatibility with (most) PS1 games by having an actual PS1 processor in it; previous exploits like Free McBoot don't have access to that processor and can only play PS1 games through emulation on the PS2's main processor. I wouldn't be surprised if that's the case here, too.
Course, the first thing I think is "Hey, I can play the translated versions of the Phantasy Star 1 and 2 remakes on real hardware now," but then I look at their pages on Romhacking and see that nope, they don't work on real hardware. At least, not through previous exploits, and I don't see why using a different launcher would fix the problem.