Veteran scene developer/hacker Mathieulh has released information on how to Decrypt and Encrypt Communication Processor updates for the PS3 Reference Tool and PSP Hardware Tool, here is a quote:
This is how to decrypt/encrypt Playstation 3 Reference Tool Communication Processor updates. (use this knowledge wisely)
This was achieved by exploiting the communication processor firmware and gaining root privileges on the running Montavista Linux.
PSP Hardware Tool Updates use the very same encryption but a different key inside the toolupdatedec binary.