On my Slim PS2 everything works but PS1 games loaded via PSXLauncher (my imports for example). As I don't have a PS1 at the moment, using component with my PS2 will be a no go for me. The issue with PSXLauncher and using a component cable is that the colors are wrong and the image is too bright, it looks horrible.
The other thing is, unlike with the Xbox, I didn't notice much improvement over composite, so I'll just keep using composite.
grt
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