I've figured out how this works now.
This article, in it's entirety, is the scheme itself.
Rumors like this spread somewhat quickly, depending on how much attention it gets. The more people who see that article, the more people they tell, and so on until everyone knows about it.
Then, as people begin to play their PSX games and do badly, they start to think that maybe the copy protection thing might be in their game (rumors never spread accurately over time - hell, if the article said this wasn't going to be put in until 2004, half the people would probably never even find that part out), and they go out and buy the originals.
And, of cource, if they ever do manage to get their actual copy protection algorithm working, that might help also