FAT32 doesn't support files larger than 4GB.
What you need to do is to Jailbreak your PS3 (which you can't do as you're on FW3.50), install the Blackb0x FTP manager and then use your PC to FTP into your PS3's internal HDD. Then you can copy the entire game to the drive.
The PSDowngrade that has been released has been confirmed to work on FW3.50... so if you cannot wait for an open source version, then you can always buy that product, downgrade your PS3 to FW3.41 and then you'll be good to go. If you buy the PSJailbreak and PSDowngrade together, then you have a device that will JB your PS3 after you've done the downgrade.
Personally, I'd wait for the dev's to get a free version of the downgrade running, then buy yourself a development board or one of the USB dongles that can take any HEX. It'll be miles cheaper but requires patience.
60GB (120GB WD Scorpio Drive) PS3 (CECHA01, NTSC), 3.7OFW
60GB (640GB Samsung Drive) PS3 (CECHC04, PAL), Kmeaw 3.55, Repaired (Dead Laser)
PSP-1003 FAT, CFW5.00 M33-6 & Prometheus v2
X-Box 360 Xenon (JTAG'ed, 500GB HDD)