By using custom firmware, you can modify in what is called the Recovery mode the CPU speed used in game and on the XMB. You can leave it to default, which will then use the CPU power the game was coded for, or force it to 333Mhz, using more battery but enabling a much smoother experience on games that were designed only to use the first 266Mhz of the CPU.
I've tried PurE that way, and it does feel a lot smoother, although the frames are not locked on the game and you can therefore see some image tearing at some times (Especially in first person view) because the processor is faster and renders a part of a frame that could not be seen before because this processor power was not available in order for it to be rendered. However I'll take smoothness over lag any day