I think there are cool applications for this. The video output is not only for games but for movies as well. I travel now and then for my job and I don't want to be carrying around my xbox or ps3. This option is pretty cool because you can play on the plane or airport, then when you get to your hotel you can hook up your psp to the tv and use it as a dvd player. Then if you get tired of looking at that little screen you can play your games on a bigger screen. It's not the best picture but if you're in a hotel room with nothing to do, it's better than nothing. Not only that, I think they will come out with an update to make the output video look better.
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