As I understand it, it has lax checks if all disks are original. Some games required many, Pt.1 was on one, Pt.2 was on another, and a memory card sewed this monstrosity together whenever you switch disks - as it had no HDD, no install options.

Designing a game around that was hard and probably meant frequent checks, delays, and also a player having incomplete game if only one disk is missing or scratched if they want to play again - and you swapped them back and forth. So that dev implemented zero-check on a second disc after the first one is checked, a command to kill a game and start anew, and with that you can put whatever you burnt on your CD, leaving the console clueless it's not your actual disk 2. It still needs you to boot with original Aliens first and put code, so it's not exactly stealing anything directly, but oh god it's an interesting vulnerability.

I haven't heard of something akin to that, besides weird cartridge combos on old consoles where you put one into another or other heresy like plug-in cartridge readers, hardware extenders, etc. It seems Sony was convinced the first check is there, and it's ok, but never thought you can abuse it up that great, and had no further investigation was put.

For a console that aged, that had hardware jailbreaks and emulators for years, I don't feel they'd hurt him now. Twenty years is too much even for them. They'd still sell mini-PS1 without any problem as it has no disk reading capabilities and won't care.