If you're talkin streaming ripped Blu-Ray video, yeah you can do it and there are a few things you should know:
1) Video must be encoded in RAWAVC (*.264) format, High Profile 4.1 & I prefer a Quantizer of 22
* Note: you can do a raw rip of the video stream from disc, but it's huge!
2) Audio doesn't need to be re-encoded as long as an AC3 track is present, rip the AC3 track and if you like also rip the dolby digital plus or dts truehd stream
3) Mux them all into a .m2ts. If you're including HD Audio, put the DDP or THD track on Audio 1 and then the AC3 track on Audio 2. The PS3 doesn't care which audio track the AC3 is in.
Most importantly, you must be wired into your router to make this work, the PS3 only has wireless-G and can't sustain a high enough transfer rate to avoid stuttering and pausing.