Got a link to the modified version of the fix permission package to change all /dev_hdd0 permissions? I can only find UP0001-FIXP12345_00-0000111122223333, which I assume only changes the permissions for the LAUN1234 game install directory?
"chmod 777" to a file allows read/write/execution (+rwx) for everyone
"chmod 666" to a file allows read/write (+rw) for everyone, which seems to be fine for the PS3 - even for eboot.bin files.
"chmod 777" to a directory allows read/write/RECURSE THE DIRECTORY TREE (+rwx) for everyone
"chmod 666" to a directory allows read/write for everyone but NOT recurse the directory tree
To summarize this:
It makes no difference for the PS3 if the files are set to 666 or 777, because it seems to ignore the execution flag.
But if you set all directories to 666 you'll not be able to change into these directories anymore. It's very important to set them to 777.