So after about an hour of searching, I've once again come to the conclusion that wireless tethering is not an option between the Droid and the PSP, even with Wireless Tether, unless someone can prove me wrong...
Cool CM Tricks
custom_backup_list.txt - make a list of files in /system that will survive a nightly install (ringtones, notifications, system apps, wallpapers, whatever)
in Terminal Emulator, set this as your shell command: "/system/xbin/su -c /system/xbin/bash". You get all the features of bash, root access, and you can still use the initial command field for whatever you want (default is adding /data/local/bin to your path)
People droid 1 does have an option for tethering not for hotspot though! FYI im not rooted nor have an apps that does that. I can tether from the 2.2 os update. Now portable hotspot you guys dont like rooting like me , going to have to wait for developer to port one in the following month like they did with bluetooth sharing