Short answer: Yes
This is just a general idea on how to make it work.
1. Configure your sound card so that the "stereo mix" or similar can select which input device. Alternatively you can use Virtual Audio Cable to connect your line out to line-in without cables. In the worst case, it is possible to use a 3.5mm stereo male-male between the sound card's line-out and line-in jack.
2. Install the SHOUTcast DNAS server OR Icecast. Change password for higher security (shoutcast use "changeme" as the default).
3. Install (Winamp + SHOUTcast Radio DSP plug-in) OR edcast stand alone. Configure program to stream audio from your line-in device (such as the stereo mix) to the radio server, if it works will dB-meter on the move in time with the music. Set the program to stream audio as mp3 in the desired bitrate. Make private flow (avbocka audience), enter password and connect to the radio server. Try to connect to the server ( "http://localhost:8000/" on shoutcast DNAS).
4. Add the stream to your PS3 Media Server
5. Start listening on your PS3.