Some Blu-ray-to-PSP movie transfer details have now been revealed. Movies are around 1GB and take 3-5 mins to download via USB to your PSP's Memory Stick Duo. The movies aren't actually stored locally on the PS3.
The service is going to be free and should be available sometime this year. Sony say it can be potentially used on any Blu-ray movie but they're still figuring out how the DRM is going to work with the service.
To quote: Sony is still in the processing of reviewing how the DRM is going to work, and how portable the copies are going to be (important, since they're stored on Mem. Stick Duos, which are pretty pocketable.) In particular, the number of copies you can make from each disc is still up in the air--so it looks like how many friends you can share with is definitely going to be limited.
DRM-wise it's nothing unexpected--given Blu-ray's emphasis on strong copy protection, Sony's obviously not going to give free reign with the PSP copies. But even with some limits placed on the service, it stands to be one of the best PS3-PSP connections yet.