Alright, I got my components to start digging into.
Picked up a dirt cheap SNES mouse ($5), and original Arkanoid spinner. I've cleaned up the mouse, but still gotta tackle the Arkanoid spinner.

I've got experience cleaning these spinners up and getting them spinning silky smooth from my refurb cocktail project a while back.

Disassembled the mouse to see what we're dealing with here. Optic sensors on a small PCB, encoder wheels for each axis, and of course the two button switches:


Here's a shot of the encoder wheels and a comparison. Different tooth ratio for sure, if they were closer I might have just tried my physical solution, but it looks like I'll have to go the electrical route.

I've read somewhere that the Arkanoid spinners with taito optic boards are active-high. I'll have to look up that thread again, but I know there is a way of determining whether the optics are active-high or low, so I'll need to determine that on the SNES mouse. I know i can convert the Arkanoid spinner to active-low if I need to, by introducing a couple resistors on the data lines (again I'll have to find that thread), but I think I'm going to have to try what H_C suggests and tap the data lines from the Arkanoid spinner's board and solder them to the SNES mouse PCB after removing the optic sensors.
For Arkanoid: Doh it Again with the SNES mouse, left/right movement obviously moves your ship, while up/down are used for menu navigation. Left mouse-button is fire/select, and Right mouse-button is pause. I'll definitely need two push-buttons connected for these, but I'll also need to figure out how to get Up and Down movement translated into button presses. I don't *need* up and down, if it comes down to it, but it's a nice bonus to have so that I don't have to connect a P2 controller to just access menus.
First thing I should do is verify the optic board works on the Arkanoid Spinner. Since I don't have an arcade PCB of Arkanoid to do a quick hook-up test, I'll have to do it the old fashioned way and measure voltages with a multimeter.
More investigation to come, any feedback/suggestions are welcome.