When a Playstation 3's firmware sees these bits set on a BD-RE, the stream is assumed to contain copyright material, which according to the BDA spec shouldn't be allowed onto a BD-RE, so it refuses to play the stream. I haven't tried this with a BD-R.
The solution? Bill Foote has written a utility to parse an MPEG2 transport stream and clear these bits. Its called cpistrip and is available from the file repository of the java.net BD-J Forum, here: [Register or Login to view links]