"Hmm as far as I know that's a short and will burn up your PS! Yes, AC ground is chassis ground and electrical ground. "
The Power supply is no different then the 5V DC power supply many have already seen, at least the + - 5 and 12V and ground terminal. Remember back in the old days when you are plugging +5V and ground into those old bread boards? Sometimes you accidently hook up ground to high. What happens is your entire circuit is now grounded. Nothing fries. How does that work? I not sure, but I suspect and I can't think of any other way, that this is done using some tristate device.
The fire everyone is so concern about is when you connect something unregulated directly into the wall. You have one side that's high and won't budge, and you have one side that's low, or ground and also won't budge. The result is a bare potential accross the wire and we know where that leads to.
I think people can relax here. Your power supply plugs into the wall but before any of that current makes it to your motherboard, there are regulation circuits that protects it. Attaching ground to high simply pulls everything down to ground.