I thought of the same thing! But then I realized all the trouble I would have to go through to fine the right xbox 360, get someone to hack it, download more games, etc etc...
I currently have ps2 and dreamcast on my system.. an my current issue is choosing between setting up the joysticks to be the control pad or analog stick... there is always a game that uses the control pad instead of the analog stick or only the analog stick and uses the control pad for other functions. Soooo.. you'd either have to choose to have only xbox 360 games that support analog or the control pad.. or I guess you could eliminate playe 2 and use your second joy..
But yeah, this looks really nice. I think i'll do it once it gets easier and then I'll figure out how to integrate it into my cp.