The USB port makes this viable as an add-on but expensive as hell unless the media player aspect really takes off in a big way. Which doesn't seem likely as Sony has now ceased production of the PSX multi-function deck that would have been the center of that strategy.
I can see one cool way to do this. One of the third party carrying case has a stand built in to prop up the PSP for viewing videos. Take a design like that, make it a bit thicker to hold the drive and a substantial battery of its own, and the result could still be competitive in size, weight, and cost to a dedicated hard drive based video player like those from Archos.
Again, very expensive. I just don't see it happening except perhaps as an ultra-high-end yuppie toy produced in small quantities.