Nice to see that the work for an open source game loader finally goes on. I am willing to help with such a project, as soon as my spare time permits (unfortunately not within the next two weeks ).
Based on romz CDVDMAN/FSV work posted here some time ago and the sources from HDProject V1.081 I have created a network loader. It does what you would expect: game data is streamed over network from a small PC server app which has access to the game ISO.
But don't get your hopes up yet - it is in a very early stage, hackish, crash-prone and I won't release it in its current state. But there are also good news: It already runs some of my games (reaching ingame with Tekken 4, Katamari Damacy and Devil My Cry) und FMVs play smoothly (AFAIK FMVs judder with USB Advance, haven't tried USBA myself).
Sadly, I haven't continued to work on this for some month now.
With work going on for USB-Loading and HDD-Loading, I think we should do what Polo35 already mentioned: Combine efforts and create a Game Loader project with common user interface for game selection and management, common game loading core and common CDVDMAN-frontend with several IO-Backends for IDE-HDD, USB and Network.
What do you think? Can we host such a project at an open source hosting platform like Google Code, gitorious.org or SourceForge or would Sony let take it down? PCSX2 is alive at Google Code, I know. But I think our case is a bit different.
Oh, and of course, would all authors of existing and reused sources agree with that?