I would like to say after further review of this 2nd Video
naneo has messed with program for quite some time, she knew that things were being loaded into RAM from the hard-drive (if you look the ammo in the bottom right doesn't load immediately, also I bet she choose that level because it has a very short visible range. There is also apparently extreme lag that you can see right after the explosion.
What I am getting at is that the hypervisor might still be in tact; or this program opperates continiously throughout gameplay, processing, and if this is true, is there an apparent limit on the PS3 processor, or is it because it would be written on the main PPC-core?