Ziggy587 over at Racket Boy looked up some more info.
Ah, OK, makes more sense now. I didn't know where PAL M was, it's Brazil. Or "Brasil" apparently. :lol:
So according to Wiki, "In Brazil, PAL is used in conjunction with the 525 line, 30 frame/s system M, using (very nearly) the NTSC colour subcarrier frequency. Almost all other countries using system M use NTSC. ... PAL-M signals are identical to North American NTSC signals, except for the encoding of the colour carrier. Therefore PAL-M will display in monochrome with sound on an NTSC set and vice versa. ...
PAL-M being a standard unique to one country, the need of to convert it to/from other standards often arises. ... Conversion to/from NTSC is easy, as only the colour carrier needs to be changed. Frame rate and scan lines can remain untouched."
http://en.wikipedia.org/wiki/PAL-MSo it makes a lot more sense why such an adapter would exist. IIRC, Brazil imports a lot of NTSC stuff.
Also, you can test this on your NTSC TV. It'll just be in black and white.
edit: For $1, I totally would have bought it too! I would think it would only be useful to some one in Brazil, but it might not be too hard to sell in the BST section of game forums.
Last thought, since it seems like it just inputs composite video (and nothing unique to the PS1) than you could modify it to just accept composite video instead of the proprietary Playstation plug. That way, you'd be able to use it for pretty much any NTSC source and adapt it to PAL-M. At least, I assume so. It would make it easier to sell that way.