Not sure, I don't have a PS3.......yet. I should think so since it serves up FLAC to my 3808. All you need to know to mod the 323 can be found here

First thing you have to do is load Fonz Fun Plug, once that is done you are pretty much set to load just about anything you want onto the 323.

Jason
M80 v2
VP160 v3
QS8 v2
PB13 Ultra
Denon 3808
Samsung 85" Q70