I would fall into group #2.
I have been wanting something just like this, that can be controlled via a small DOS driver program. I want to be able to cycle them in some sort of pattern while in the FE. Then when launching a game, I want to light the buttons used, and also light a 4/8 way indicator for each joystick (probably will switch to Randy's top-panel switching sticks as well).
I also want to light up the trackball for those games, as well, and perhaps light the Start buttons if possible (might not be for the extra DOS driver version and my own Mame version).
Wade