Johnman! I found a fix!!! As it turns out, our problem is the adapter itself. Not the type or brand, but the very fact that it is THERE seems to kill our connection.
Solution: Buy an HDMI to DVI >>Cable<< for your video, make sure you set the PS3 to 720p beforehand.
Use your component or composite cable with a red/white female to male 3.5 audio jack, and a 3.5 female to female for sound.
Let me know if it works for you as well!