My next question is how to count number of inputs. It is my understanding that a four way and eight way joystick both use four inputs. Is this correct?
I read your question incorrectly - they are both four inputs, but they both need 8 quick disconnects.
In regards to encoder chips, is it possible to use two? I ask because I have not yet decided on whether I will make a four player control pad or simply a two. If I were to make a two player controller using a cheaper encoder such as the KeyWiz Max, would I later be able to add another to increase the number of inputs? How would that work?
With the I-PAC/2, you could "daisy-chain" another I-PAC/2 using the pass-thru port. With the KeyWiz, you cannot do this, however, you could use the KeyWiz with a USB I-PAC/2 later on (assuming you are not running your cab in DOS).
Also, has anyone made use of the special connectors for the KeyWiz to make a button permentally ?shifted? and if it works well?
I plan to use them and they work well but they are not "Magic", but they do add a lot of functionality to the KeyWiz. In other words, you can't add 24 special connectors, and have a 56-input encoder. You can use the special connectors (theoretically) and have 32 game inputs and up to 24 admin inputs, which is pretty cool.
Things to consider: Pressing one of the special keys shifts all the other keys -
so, say I have P1B6 shifted as a Special Coin 1 key, and P1B7 shifted as a Special Coin 2 key. If I press Coin 1 and then press P1B7, I will generate a Coin 2 output, instead of the P1B7 output. Not a bad-tradeoff, though.
My personal opinion would be to only have 4 Start and 4 Coin buttons using Special Shift functions. I don't plan on having any other admin functions except Pause and Esc, which I would wire to dedicated inputs, so I am down to 30 game inputs, which would support 4-player, 3-button games, but not 4-player 4-button games (with doubled inputs, though, in other words, Player 4 UP and Player 1 button5 might be the same input).
Finally for option 3, which top switch controller represents the true 4 way the best; Omni-Stick Prodigy or The Super Stick(?) or any others?
I assume you mean the Omni-Stik Prodigy or the T-Stik Plus. I think either one would be good, but the T-Stik probably has a shorter throw and stiffer spring than the Prodigy (And the Prodigy has a short throw to begin with). The problem with option 3 is that I think you would be unhappy with the difference in feel between player 1 and player 2 with say Happ Competitions on the other 3 sticks and a swappable stick on player 1 - so option 3 reworks to -
One prodigy and 3 Omni-Stik (Basics), or,
One T-Stick Plus and 3 T-Stick (Basics), both of which are pricey, or
4 Happ (Competitions?) and a dedicated 4-way.
BTW, in response to your later question - J-Sticks have a longer throw - bad for Pac-Man games, but lots of people love them.