Would you really want to go through all of that every single time?
I don't really understand why everybody praises XBMC. Isn't it just a nicer Microsoft Media Center?
I'm not overly familiar with MS media center but in terms of format compatibility XBMC is like the VLC of htpc software. There's nothing you can't throw at it that it can't play. If you're just doing divx, then the ps3 is fine, but if you've ripped your DVD collection to a samba share, you can navigate into it click on the .ifo and the iso plays. Even .rm files are usually ok. The plugins are also helpful. That being said I think boxee will take the torch from here with it's wicked hulu support.