I understand that Other brand SxS cards are not compatible with the EX1 currently, but if you could purchase an expresscard of a different brand that was fast enough, what keeps it from working in the EX1?

current firmware

But what in the firmware is it that makes it know it's a Sony card and not something else? Is there software on the card or permanent hardware embeded?

I can't answer that, but we've heard a couple times that a future firmware upgrade would offer a select list of compatible cards.

We were told today that SanDisk will be offering a card compatible with the EX. Allegedly, it will need to be formatted before use, where the Sony-flavored SxS does not.