As the title says, I want to know if it's possible to do such, from the google results doesn't seem like it but my theory is that there should be some way to have my PS3 displayed on my PC and then use my PC to screen capture it. I just don't know how to do that though, anyone know how or if I can do that? And if not any ways to do it at all, I don't have the money to spend on anything so I just want to use my PC to record it.

There is a product like that, but you can only record in 480p I think, because it doesn't use HDMI, it uses AV cables. It converts AV into usb then you download a program to display it on the screen, and it does the capturing for you. The capture files are very big, so you'll want to decompress it in Windows Movie Maker after you get it all recorded.
I can't remember what it's called, the program or the device, sorry

Damn that sucks, wish there was something easy that'd just let me view the PS3 on my PC while playing, and then I have FRAPS record it.

Well that's basically what this thing is, it's just kinda vague and only 480p

You just need an HD camera and some splitters.

Get the video lead that has component video out (or even just the yellow one)

then get a splitter,

split the feed, one to the TV the other to your camera.

bob's you're auntie

That would only capture video, not audio, and the other issue is that not all HD cameras have the ability for you to connect a VGA to them (for example: my new expensive HD video camcorder has all sorts of connection options, but not VGA).
So basically, you would get terrible audio if you were to do it that way, since the audio would be coming through the TV and then into the audio recorder on the HD camera (unless you used more connections to record the audio directly into the HD camera).

Potentially, that could work though, since you wouldn't technically be using a capture device.