Thanks for the replies.
As I ended up installing Yellow Dog myself, I will go ahead and answer my questions here myself, in case anyone else will be interested.
In order to install an "other OS" (Linux), the PS3's hard drive needs to have a partition for it. In order to create two partitions on the hard drive, it needs to be formatted, and all your data will be lost. It is easy to backup your stuff on an external hard drive (or other storage media) using the "Backup Utility" in the XMB System menu. Then, after you format your hard drive (choose custom format and allot 10GB to Linux), you can restore everything from the backup - easy as cake, really. The user account information is not lost when formatting the hard drive. Once this is done, you can install Linux using an install dvd. (Download and burn image form the interwebs, it's free.)
I picked Yellow Dog, as it seems to be the one that was mostly designed for the PS3. It will have the most features working "out of the box", whereas you would have to spend a lot of time configuring Ubuntu. I am a Linux newbie and don't need advanced stuff, so Yellow Dog was the obvious choice for me.
The install is fairly straight-forward, but does take approx. 1 hour. After that, it's ready to use, all programs (Firefox, Open Office, Gaim, etc.) working right off the bat.
Two things that DO NOT work right away are WiFi and Bluetooth. These will have to be installed/configured manually. Instructions are available on the web, I plan on taking care of those two things tonight.
Note: For the few minutes that I actually used Linux last night, it seemed pretty slow. Seems like Sony is not allowing the OS full access to all the hardware resources, so don't expect a super-fast Linux system.
The main reason I decided to install it is the HORRIBLE PS3 firmware internet browser. That thing is almost unbearable to use, and refuses to even load some pages due to "lack of memory". I hope Firefox will be better in this regard, but I won't find out until I setup the WiFi to work.
