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I am in the exact same situation. I wish I would have spent the extra money for dual shocks just for the compatibily w/ ps2 games (many of which don't work with psx digital control pads). I'm probably just going to buy an ipac2 and interface my controls through that. Will this cause a problem if the switches of my cp are hooked to the ps2 controllers also? I can't think of why it would (as long as the other system is turned off while I'm playing either ps2 or pc mame of course). Any suggestions are appreciated and thanks for all of the feedback.
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It may cause problems if you have 2 controller guts wired even if only 1 system is active.
My problem wasn't compatibility with games... it was compatibility with the adaptors for other systems. I have, what I'd like to believe to be, a "universal" control panel that will work on ANY platform(PS1, PS2, GC, DC, XBOX, PC).
The easiest way to do this was to wire a hacked PS controler to my arcade control panel. Instead of hacking a dual shock, I hacked a NON DUAL SHOCK Digital PS1 controller and bought adapters to all the other systems. i.e. PS1 > DC, PS1 > Xbox, PS1 > PC, etc.
THis saved me a TON of wiring work and I had something that would work on EVERY system with a simple change of adapter. <-- plug and play

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WHat I realized at the end was that most of the adaptors were only guranteed to work with orignal Sony controllers. A good number of 3rd party controllers work, but they HAD TO HAVE THE ANALOG portion. Wheter or not the pad was in analog mode or not was irrelevant because the adapters would work regardless of which mode you had it in.
In the beginning, I was a cheapass and lazy(original Sony guts were coated with some crap which made it hard to work with) and just went for a $5 3rd party DIGITAL PS controller. <-- absolutely NO ANALOG STICKS. To my dismay half the adapters DIDN'T work.
On my second control Panel, I decided to fuss with ORIGINAL Sony guts and I have myself a UNIVERSAL CONTROL PANEL!
However, if ANYONE knows of any PS to USB adapters that work with PURELY DIGITAL PS Gamepads, please let me know.