I have been working for a while on getting Quake working in adhoc mode and I have managed to get an initial version working, it is not perfect, but it does work (It is a bit of a hack the way it is currently done, but I have a few things to try out to improve the network play). This was done using Peter Mackay's port as the base code and changing the video functions to use the GU to speed it up a bit to help the network tasks have more time.
I have only tested this using the 2 PSP's so I am not sure how well it will work with more than 2, if you have more than two PSP's to test with then let me know how well it works.