Thanks, I figured that the FAT32 4GB limit would cause problems. Found a (possibly?) easier way:
1. Connect PS3 to home network.
2. Install UDF 2.5 drivers on PC.
3. Mount ISO with Virtual Clone Drive.
4. Install PS3 Media Server and share the root of virtual drive.
The video seems to stream OK like this even over a wifi connection; however, I'm going to copy the AVCHD structure onto the PS3's hard drive to ensure playback will not be affected by network glitches.