I've messed around with touchscreens and a program called TouchBuddy that the flight sim guys use.
You can add virtual buttons to the touchscreen that post as key presses. It is launched via command line, so front-ends could launch the appropriate layout along with the game.
The buttons can cycle through different images so they can appear to light up or toggle switches can change position.
I got into it far enough to do a proof of concept where each player could cycle through a move list for characters on fighting games.
Never took it beyond that because I couldn't get anyone else to get on board with making all the move list cards.
(I'd still like to see a program that gets all the info from command.dat, images from a folder, and spits them out automatically)
The touchscreen would also be useful for games like Thayer's Quest which had a quazi-keyboard with a ton of buttons.
Another thought was to display instructions for Golden Tee and have the left and right buttons on the touchscreen.
So many ideas, so little time.

Still arcade controls, but I have shoddy little CP built with a postional gun and am working on another with dual analog happ triggersticks.