Yeah. It generally works great. Basically, if it's a Divx file compatible with Stage6, it's compatible with PS3. That's one of the reasons why Stage6 rules for getting videos for your PS3.
Most other videos that don't work are pretty easy to convert to make them work. I'm a Mac user, so I use these three tools:
Quicktime Pro with Flip4Mac and Perian installed
FFMpegX
Divx Converter
With those, I can pretty easily convert any tricky or non-standard video to a PS3-compatible video fairly easily on my Mac.