This was utilized by the initial 1.1.3 jailbreak, before the Ramdisk Hack was used. A program would be run on the device, which replaced the system files with those from the new firmware. Issues with the software arose from using this method, hence why it is no longer used.
It was not strictly a jailbreak or exploit per se, but was a method of "upgrading" iOS while remaining jailbroken. This technique was taken advantage of in jailbreaks like iBrickr.[1]
