Trent: You are correct. When we say there is no downgrader for any firmware above 3.03 we mean software based downgraders that require a 'security flaw' to be found in the firmware you want to downgrade. They require no additional hardware though.
A modchip can be installed onto any (the old PSP modchip didnt work on TA-82 PSPs but apparently there is a new one coming that does) PSP and can then downgrade it no matter what firmware it is running.
Assuming the thing works as they say it does that it
Thats because the modchip is wired directly onto the connections between the PSPs flash memory that stores the firmware and the processors that run the stored information.
You essentially have 2 lots of storage space for the firmware instead of one.
You could install 1.50 on the modchips flash space and boot from that, keeping the actual PSPs original storage with 3.30 on it.
Or you could use the modchip to write whatever version of firmware you want straight to the PSPs original storage to 'downgrade' it.
The chips normally arent that cheap and you will need to be, or know someone who is, good at soldering very small connections.
As dark_alex has shown it is possible to brick a modchipped PSP still though.