There seems to be a lot of confusion as to why this should be achieved.
Although using a flash drive my be a stepping stone to proving the theory I think the ultimate reason for doing this would be as an adaptor to add your own HDD.
I'm hoping that someone will mod an existing Memory Unit, leave the Security Chip intact and just solder on a SATA or PATA adaptor in place of the memory chips themselves. Very similar to what the iPOD Nano PATA mod achieved. (Mentioned earlier in this thread.)
The MU to HDD hack seems easier in theory than replacing the 20GB with a larger hdd, which has already proven to be very difficult and not worth doing.
Let's put it this way, whoever figures out how to do this will become famous overnight on the mod scene and no doubt make lots of cash from selling the hacked MU's.
I'm just trying to give the true mod freaks a nudge to put more effort into this
If they could do it to the Nano it can be done here I'm sure. The Datel 4GB PSP device also rings similars bells. It's posible that the security chip stores a capacity value which may prove tricky, but frustratingly, no one has even tried to see if that is the case.