I know it can be done, but I have some concerns.
Let us say I double the hard drive space with a SATA/Seagate HDD which I'll have to buy (I do have a 160 GB Toshiba HDD, but I doubt it will fit) with at least a 160 GB size. I know I can transfer the data from my 80 GB drive (including the PS3's software) to the 160 GB. But if I transfer EVERYTHING that is on the 80 GB drive to the 160 GB drive, will the backwards compatibility transfer as well? This is what I was debating. If my system did not have the backwards compatibility, it wouldn't be a problem. But I was curious if anyone knew the answer to this.
@The_Shadow:
How do you format the hard drive? Do you start the PS3 up and let it format the hard drive? Or can you take the 80 GB drive out, do a transfer of data from the hard drive onto a computer, transfer the data from the computer to the 160 GB, and then place the 160 GB in the PS3 and it works?
I know that the 20 and 60 GB models had the Emotion Engine chip, which was PS2 functionality programmed into the hardware. The original 80 GB models emulate PS2 games based on newer updates to the software that are provided through Sony. I wonder if this is a help to anyone who knows this. I'm basically looking for someone who has done what I did with a backwards compatible 80 GB model and upgraded the hard drive and be able to tell if, with the bigger hard drive, it'll still play PS2 games.

I beleive it would work.

the backwards compatibility is on the hardware , not in the hard drive , it will still be there

to swap the hdd .: first do a backup to an external drive - it has to be fat32 format and have 80 gigabytes free space .
next get a sata 2 1/2 inch 5400 rpm ( important to have these specs - a 7200 rpm hdd is too fast and will overheat )
just swap drives and format the new one . then restore from your backup