It's been quite some time since I bought my MP4R2 (back in 2006?) and I've only surf to these forum's every few months. It looks like the MP4R2 area has cooled down considerably but there is the occasional posting so I thought I'd do my part to impart knowledge.
First, I should report that my MP4R2 just rocks steady, never had any problems or issues. I don't use it daily by any means and I don't do funky things with it (like helmet-cams). The primary reason I bought it was to encrypt video recordings for PSP playback.
I recently purchased a PS3 and was working on getting my PSP (Model 1001 - old school!) updated to support Remote-Play. The last firmware I did on my PSP was 3.8 (the one that rolled out Internet Radio - which was nerdy cool for sure) so I pulled down 5.03 (release Jan 2009) and upgraded. I also noticed that after cleaning up my 2GB Duo card that about 400MB was unaccountable, meaning there was nothing for me to manually delete and yet I couldn't "see" what was taking up the space. I figured that I should use the Format Memory Stick with the fw-updated PSP and recoup the space.
That did the trick, I had 1.9GB free space but I noticed that the 101MNV01 folder that should be (and had been) under the MP_ROOT folder had not been recreated, just the other two. Well, when you set the MP4R2 to record for the PSP format, it wants to write the files in 101MNV01 so I used a PC+cardreader to create the folder and did a test recording of the season premier of South Park. It recorded perfectly, writing to MP_ROOT/101MNV01/M4V00001.MP4 without issue. I popped the card in the PSP and it played back perfectly. I smiled with a sigh of relief.
So, the "with caution" warning is that if you reformat your PSP memory sticks, be prepared to recreate the need folder 101MNV01.
Oh, BTW, PS3 + PSP Remote Play is uber-nerdy fun!
UPDATED - With the addition of PS3 to my entertainment equipment, I now have 2 reasons to record using my MP4R2. I use the 640x480 super-fine to make recordings to playback on my PS3+HDTV. But wait, there's more! With Remote-Play, the PS3 goes one step further and streams those videos over the internet to playback on the PSP. Hmm, sling-box like functionality.