In an exclusive with Phil Harrison, threespeech.com succeeded in digging some important information about backwards compatibility of European PS3. A lot of disambiguation regarding European PS3 surfaced that PS3 will be less backwards compatible.

Making the backwards compatibility issue more obvious, Phil said that there are more than 1000 PS2 titles that European PS3s would support.
European PS3 owners were feeling skeptical as there were few PS2 titles running on PS3 costing higher but with announcing the figures, they would have been feeling a bit relaxed.
To make this feasible, Sony has replaced PS2 hardware with special software that plays PS2 games flawlessly. The European gamers
Lastly, Phil Harrison assured that a list of online backwards compatible titles will be available on PS3 launch day and that it will get longer as PS3 gets any firmware update.
Via: engadget