I think that was just a typo, the screenshot shows the file as .m3u and the file is also listed in the EmulationStation's gamelist (so the extension is picked up).
@neogeo1981 - can you double check the extension of your .cd1/.cd2 files and make sure there's not a .cue present ? The OS might hide the extension and this might explain why they still show up in the list.
I've been considering compressing roms lately as I keep them uncompressed for all systems to prevent SD write cycles from extractions. These wouldn't extract or cache whatsoever, right? Also does RetroArch cache from my current .bin's and .cue's to "/tmp/Retroarch/"? I've been considering changing RetroArch's tmp to "/tmp/" (a RAM drive) but that would choke a pi3 if it tried to cache a PSX game, thus I'm trying to trim them without the need of extraction.
@blackshadow Interesting. From everything I read on pbp files it only costs a bit of load time because of the format. I didn't consider that the compression would affect it as well, considering the fact that I'm always playing SNES and GBA games still zipped and have never had an issue.
That said, I do plan on sticking with pbp files for multi-disc games since the 30% compression I get from it will help save space on my SD card for more games in the future
I would recommend converting your .bin files to .pbp.
Once done, follow the video tutorial on how to swap discs. You can then assign hotkeys (button combination with your assigned hotkey) to swap the disc without needing to open the retroarch menu every time for that game.