I am pleased to announce I managed to get the RPi3 to pair with the PS3 controller. Only thing I had to do was update the RetroPie Script to v3.7, reboot, plug in the PS3 controller with a USB, disconnect the PS3 and then press the home button. I never even bothered to go into the pair menu or anything.
I paired 3 PS3 controllers with the builtin bluetooth.