Ok, after wrestling with those infamous screws, calling sony about getting a replacement cage, getting the run around being told they no longer offer replacement cages, and then writing customer service and literally being told to use a pair of needlenose pliars on the screws to loosen them, I used a pair of needlenose pliars on the screws to loosen them! Protip: Don't even bother using a screw driver if you have an older model PS3, those HDD screws are machined in so tight, that the flimsy metal they're made of can't handle the stress of lossening.
Anyway... Popped the new HDD in last night, and damn, 500gig is awesome. The first thing I did was re-install the most useless thing ever, I mean Playstaiton Home. Why? Because I have the space to waste on it now!! Also ran a couple HDD tests, download speeds, running an older game that I heard could skip (Uncharted Drakes Fortune), and all seems well. Actually, I did get a minor scare turning it on this afternoon, with it not recognizing the HDD, but I promply shut it down, tapped the drive a bit to make sure it was secure (yes I already checked to make sure all the screws were in tight), and turned it back on, and all was fine.
Also for those thinking of upgrading, system software 3.21 seems to fix the need to re-install updated software like the guide says, starting it up with the new HDD still prompted a format, but 3.21 booted straight up, instead of reverting to the production version.
What perfect timing, Final Fights out, Afterburner is almost out, and I'm even tempted to check out the GTA bonus content.