Taken from the Tokyopia forums.
Q: So you are saying even that color bleeding is realtime? How come the sperical harmonics are *that* much faster method than anything else (or is it something that PSP has that speeds things up?), and why aren't they used in games already, then?
Dylan Cuthbert: It can be used in current games but the PSP is simply faster at doing this kind of stuff than the PS2. The colour bleeding is all tied in with the spherical harmonic calculations which is a fairly recent (and public) technique for combining all the lights in a sphere into one set of coefficients at each point. The colour bleeding changes in realtime as the light source moves/changes.