I too had high hopes for the fragnstein on the PS3, but it never truly felt like a mouse. It was easy to move around, but really difficult to target in small movements because the cursor would move too far one way or the other. I did love the button placements and the separate controller on the fragnstein though.
I finally decided to take the plunge and purchase a XIM1 off ebay (link below) and just received it yesterday. I still have some more configuration settings to play with, but so far, the movement is much improved. I am using the fragnstein with XIM and it works great. Again though, I have to dial in the settings more since it's not 100% like PC yet, but I'd say probably around 80-90% close. The settings with XIM really allow you to dial in dead-zone spots and other sensitivity settings.
I can't saying anything about XIM1 vs XIM2, but from what I have read, XIM1 & XIM2 only matter if you are using it with the xbox. You shouldn't see a difference with the PS3.
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=160436037300&ssPageName=ADME:B:EF:US:1123