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Bluefreeze
iFaith has a protection that you don't use it on the wrong firmware to protect you. Bluefreeze modifies the firmware version (and firmware checksum) in the iFaith certificate file, so that this check gets disabled. By doing so, you can install any firmware version on your device, even without having saved the SHSH files. The problem by doing so is that you actually install a firmware without signatures.
Bluefreeze asks you to build and browse to two ipsw's one signed properly and one not signed. Then Bluefreeze swaps the properly signed img3 files in the properly signed firmware file with the unsigned img3 files in the unsigned ipsw thus resulting in an ipsw file with properly signed img3 files. This firmware file is used for the downgrade.
Having an unsigned firmware installed won't let you boot of course. But using the limera1n exploit (DFU mode, then using redsn0w) you can still boot your device up. The problem is only that you have to repeat this every time (similar to a tethered jailbreak), so it's not a downgrade you would want. This should be your last resort, and only if you absolutely need a downgrade.
This way a downgrade to iOS 4.3, 4.3.5, or 5.0 from 5.0.1 is possible. Supported devices are iPhone 3GS, iPod touch 3G, and all A4 devices.
One common misconception about this downgrade solution is that it may conflict with an untethered jailbreak. This is completely false. If proper exploits are used (anything but a userland one ex: Jailbreakme 3) and properly jailbroken this tethered downgrade would become an untethered downgrade.
Purpose
With this method you can install a firmware for which you don't have SHSH saved for some tests, for examle if you're a software developer and need to do some tests on a specific version.