As promised by the PS3Key team they have released there PS3Key Downgrader, this like the other downgraders allows you to downgrade your PS3 with 3.50 or less Firmware to 3.41. Allowing you to then flash the PS3Key again to then jailbreak the machine. The site was down yesterday and today I still have login issues. (Which they said were solved, rest password does not work either!) They need to get this sorted and I would test it out myself. I’m keen to play GT5…

If you need to downgrade a PS3 with firmware version 3.50 or below you can now grab the PS3KEY JIG firmware from the downloads section! Please note that we do not host the modified PUP file or any other file that may contain copyrighted code.

Guided to downgrading with PS3Key:

PS3KEY DOWNGRADE GUIDE

Note: When downgrading you may in some cases loose saved data on the PS3 HDD.

Flashing PS3KEY
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Flash your PS3Key as you normally would.

Note to Atmel PS3Key users: This firmware has automatic bootloader entry, so there is no need to plug/unplug it to get into bootloader mode after flashing this firmware.

After you have completed the downgrading procedure as described below you must reflash your PS3Key with the standard firmware.

DOWNGRADING
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- Prepare a blank USB memory stick with only 2 files on it: Lv2Diag.self (file 1) and the modified 3.41 PUP file (sorry, we cannot provide these for download). These must be in the root of the memory stick and there must not be other files on it.
- Insert the PS3Key with the downgrade firmware in your console.
- Turn on the PS3 using the standard PS3Key sequence; power cycle, power on, then quickly press eject. After a very short while the PS3 will power off.
- Turn on the PS3 to confirm that it is in Service Mode. You should see a red box on the screen saying Factory Service Mode. (If you are using a component cable the image might be garbled). Turn off the PS3 and remove PS3Key.
- Insert the USB memory stick with the 2 files on in the rightmost USB port of the PS3 and turn it on. The screen will be black, but the LED on the PS3 will blink.
- Wait for approximately 3 minutes. In the end the PS3 power button will flash green and then the PS3 will turn off.
Step 6 – Wait 3 minutes for the system to install the old FW, towards the end the power button on the console will start flashing green and then your console will power off.
- Remove the USB memory stick and turn on the PS3. It will still be in service mode. you can now verify that it has been downgraded to v3.41. If you wish to downgrade to an earlier firmware you can do so now, there is no need to use modified custom PUP when the firmware has already been downgraded to 3.41.
- Insert USB drive in PC, delete the 2 files, and copy LV2Diag.self (file 2) to it.
- Insert USB memory stick and power on the PS3. After approximately 10 seconds it will power off.
- Remove the memory stick and power on the PS3. The procedure is now complete.

Thank you for choosing PS3Key!

Source: PS3Key