Your panel mockup is what I envisioned for my panel when I first started this hobby. Over the course of two years I've whittled away most of what was unnecessary, unpractical, and redundant until I just threw everything away and went with a modular plan.
It seems to me that a panel with everything is just as good as a panel with absolutely nothing on it. People looking at this space age piece of wood with
buttons,
doo-dads and
levers will be too confused to make any attempt at enjoying it. And if they did, the effort of swapping panels will instead be used explaining, in detail, what combination of buttons, joysticks, etc. should be used to play game A as opposed to the configuration used to play game B and so on.
When you want to fit everything onto one panel, you really need to start thinking about a more sophisticated way of getting the most out of the space. Some people have done wonders with rotating mechanisms.
Here's a link to one. Though there are many others, this one seems the most modifiable to your specifications (i.e. your 1st and 4th joysticks lift up:
http://rototron.info/. Or why not go swappable panels? Make one panel joysticks, another trackballs and spinners, or whatever. You can even have it so only the center part swaps out, leaving the side joysticks behind for when you need to combine them. Many have gone this route and documented the problems and solutions, so it's not as hard as it looks.
If you really don't want to swap panels, you have to definately make a few sacrifices. I'd ditch the 49-way (unless you really, really love Sinistar, Bubbles, etc.) and all the extra buttons save for the 22 associated with the main 8-way joysticks (and a Defender layout is cool, but not practical when it's all the way in the back unlike the dedicated panel). If you are truly building this for a target audience of kids and casual users, then I'd ditch anything that's not a joystick. Seems to me that kids who didn't grow up with these games won't be as excited about controlling a game with the proper controls as those who did would. The only exception would be a steering wheel - but that's not fitting on a control panel without a swapping/modular/rotating design anyway. If
you are getting more play out of it then them, I'd keep another panel around for yourself with dedicated controls and leave it out of play when the kids come to have a turn. BTW: I still maintain that Marble Madness is more than enough reason to have two trackballs - but only when there's enough space for it to be comfortable. And on the anal side of things, it'd be better to have them the same size and type (nip arguements in the butt over who has the "better" trackball just because he/she is beating the pants of his/her opponent).
The controls are THE MOST IMPORTANT part of any arcade cabinet - so take your time planning this out. Good luck.