If you "reuse" some of the button connections (i.e. use 3 of the 7 button for your 1-P stick as your 2-P buttons), you should be able to get a 1-P fighting stick/2-P 3-Button control panel out of a gamepad hack.
You will save yourself alot of time/frustration with an encoder though.
Getting reliable solder connections without harming anything can be tricky, depending on the gamepad you get.
Definitely stay away from the keyboard hack though.
For those not familiar with ghosting, it is when combo keypresses create an unintended third keypress instead of the two intended.
Another shortcoming of keyboard hacks is that many keyboards will not let you press enough keys simultaneously (depending on which keys are press at the same time) to play games properly.