i put this to the test this afternoon on our cabinet at work, i fired up mortal Kombat and tried using the 4way JLW, if i hit it just perfectly, i could hit the diagonal and do a forward/backward jump flip, but it was very difficult. apparently it when sliding it from one direction to another, there is a small point where it overlaps and the second switch activates before the first one deactivates.
however when playing 4way games, this is never really an issue. if you were using a standard 8way stick to play pacman for instance, it is easy to get the stick in a diagonal position accidentally, causing it to not respond properly. however when using a JLW in 4way mode, the 4 positions are so clearly defined, that you could never actually have the stick in the diagonal position accidentally without realizing it. it is so easy to slide across the corners to the other direction where it stops perfectly. there may be a spit second where 2 switches are activated, but it doesnt matter because you clearly arent going to stop the stick in that position.
so, yes, it is possible to hit diagonals, but it wont affect your gameplay. the JLW is a wonderful 4way stick, i have used several others and this one outperforms all of them, hands down. I have one i am installing as a dedicated 4 way in my vertical classics cabinet, and i recently used two of them (in 8way mode) for players 3 and 4 on my showcase cabinet.(since they handles are the same as my u360s) they feel pretty good as 8way sticks, although the square restrictor takes a little adjusting to.