hi there.... I hacked like 6 or so sidewinders....
and also hacked some psx pads... (just ps1, digital ones...)
I find that yes.... the sidewinder holes are quite close together, but since the wire can hang on to a hole, its actually easier to solder (at least for me...) and the end result is a more solid solder.... (no loose ones...) I use the helping clamp from radio shack also....
but 1 thing is your soldering iron needs to have a "fine tip"... but not a big chunky tip.... go to radio shack and check out those electronic soldering tip... they're like sharp..... (if you already have them, then its fine... and just don't go crazy on putting the solder there.... usually a little bit is fine....
when I do the psx pads... (I did the original SONY ones... yes, I know they're known to be not too "solder friendly"... but well... that's the only ones I have, and can use for free...)
I solder them and without the hole, if I yank it with just little strength, its much easier to come off... (compare to sidewinder...) so, after solder and testing, I put glue all over the circuit board to help hold on to the soldering.....
(if you also do this, DO NOT PLUG IN THE PAD UNTIL THE GLUE IS
COMPLETELY DRY !!! or you risk frying the pad/console/whatever....
so... my personal opinion is to solder them to the test holes...
and for 500 MHz... my friend is using them to run Mame32 (on XP)....
its not fast enough for newer games... especially games that are video like... like mortal combat, NBA jam with the real player's head, etc. of course... that depends on your video card too..... I guess using Windows Me or 95 might help a little... but 500 might not be enough....
you know... if you're close to like a best buy or circuit city (where they say you're WELCOME to play with their stuffs, burn a CD with just a few favorite roms and try it out there !!..) its free and you can find out exactly !!!!....

hope it helps....