PS3 modding has come a long way from what it once was, and now is as simple as installing a modified firmware update.
I will walk you through the process of what I did to get the current results on my PS3.
This was done on the larger model PS3, with 2 USB ports in the front, and no multimedia bay, and no PS2 backward compatibility.

NOTICE:
I CANNOT GUARANTEE ANY RESULTS, THIS IS ONLY FROM MY OWN EXPERIENCE, YOURS MAY VARY.
I AM NOT RESPONSIBLE FOR ANY DAMAGES AS A RESULT OF FOLLOWING THIS GUIDE!

First off, this started with me attempting to upgrade the internal HDD from 40GB to 500GB,

Upgrading the internal HDD:
When placed in it's horizontal position, there is a plastic plate located on the left side of the PS3.
Just pry this off with a screwdriver, or butter-knife.
You will find a small Phillips screw holding the HDD in, remove this, and the HDD bay should slide out.

The HDD is mounted in a special bracket so that it fits in the PS3, remove the Philips screws from the sides of the bracket, and the HDD will come right out, place the new HDD in the bracket, and put the screw back in, then slide it back in to the PS3.

When you turn the PS3 on, it will throw an error, telling you that the HDD needs to be formatted before you can use it.
On a USB storage device (Some MP3 players will work for this) you want to have a PS3 firmware update placed in the following directory:
USB:/PS3/UPDATE/PS3UPDAT.PUP

In this case, I took a risk, and went with the following:
http://psx-scene.com/forums/content/update-rebug-cobra-4-53-1-rex-d-rex-edition-mod-joonie-v4-4721/
I simply put this in place of the PS3UPDAT.PUP and let the PS3 reinstall the firmware from it.

In my case, this was successful.
HDD upgrade, and PS3 Softmod done in one move.
You should now be ready to run homebrew apps, and backups.

Quick tips:
Have all .PKG files in the root directory of USB to be detected by "Install Package Files"
Do not dink around in the Debug Options unless you are absolutely sure what you are doing. (I cannot stress this enough, there are dangerous commands in there)
When copying PS2 titles, make sure they are placed in INTERNAL HDD.
When copying PS3, and Blu-Ray Movie titles, Make sure that you remove the PS3UPDAT folder from the created directory.
Installing an Official update after a CFW mod is said to brick your console, I have not tested this theory.
Don't expect to be able to play online without getting banned. (Game updates are another story of course)

There is a fan control utility as part of Webman Setup, out of sheer paranoia, I have maxed this at 99.

Recommended Homebrew:

Multiman:
http://store.brewology.com/ahomebrew.php?brewid=24
PS3 backup manager, capable of mounting and launching backed up games from external and internal HDD.
This tool can also copy PS3, PS2, and PS1 games,

BD Redirection Reset:
http://store.brewology.com/ahomebrew.php?brewid=201
I would also highly recommend downloading and installing this.
I had problems running games before doing so.
(This was also before seeing WebMan in the XMB)

ReactPSN:
http://store.brewology.com/ahomebrew.php?brewid=126
I'm honestly not sure if this is exactly required or not, however, considering it's functionality, I would keep it on hand.

RetroArch:
http://store.brewology.com/ahomebrew.php?brewid=152
The Emulator package from hell!
This emulator seems to do most of all of it, with a very high compatibility rate and speed.

PS2 Classics placeholder/Manager: (Maybe)
http://store.brewology.com/ahomebrew.php?brewid=232
Just putting this here because I installed it before even thinking to test PS2 compatibility, if you find that PS2 compatibility is not working, install the placeholder, and manager, and run ReactPSN, restart the console, and try again.
I have never successfully gotten this one to work as advertised, so I doubt that it's actually needed.

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Edited by: The_Shadow, Oct 20th, 2014 @ 10:32 pm

Thanks for posting this. Someone is going to find this to be really, really useful!

Any time, my good man.
Feels good helping out.