That is option 4 yes, alas it only really is functional on a 60gb (with 50gb to OtherOS), but still works out fine.
For what its worth, you can also use this util to backup/explore ANY ROUND disk (cept HD-DVD's basically)
AND, it has a web server, access it at http://Your PS3 IP (no spaces!, displayed on the program in the header), and you can browse the Blu-Ray disks, or your HDD (OtherOS side), and download files. Features UDF 2.5 support as well, so you can grab encrypted files from Blu-Ray movies, download them to your PC over a web-browser, and then decrypt!
That's pretty damn slick. I am not very knowledgable in the ps3 scene as I only had my unit for about a month but if i am not mistaken this could sorta be like the first homebrew released no?
Well technically I believe there are other PS3 CD/DVD-based homebrew (Lunavader, for example) as well... and a lot of Linux-based stuff. But this is the first PS3 "OtherOS" disclessapplication that I've seen if that counts for anything.