Give this a glance:
http://mc.pp.se/dc/controller.html.
You may be able to leave GND and +5V connected. You will probably still need a means of temporarily disconnecting the serial data lines and the sense. (I 'm not sure about the sense, but it may help the controller sync or something) So, you at least need switch or switching circuit for those lines. I don't know any of this for certain, sorry. If you try directly splicing the control first, then let me know if it worked.
That's too bad about the multiplayer games. Maybe if splicing worked you could connect your joysticks to the Xarcade and leave it in analog mode, connect the coin insert to a digital pad direction on a dreamcast pad, and remap accordingly. Here is an idea you can simulate by unplugging and plugging your controllers (or maybe you've already tried it?):
1. plug in your Xarcade with Mame4all running; default button mapping; start a game
2. tape down and analog right on a dreamcast pad
(see where I'm going with this?)
3. unplug the Xarcade and plug in the rigged dreamcast controller.
Do you get errors, a coin insert, nothing happens or what?
If this worked and you get a coin insert then you could probably build (find?) a fancy switching circuit instead of using a mechanical switch. That way you could implement a momentary switching for the coin insert, and just have latching switch sections two switch between guns and joysticks/buttons. If you are using real coin mechs then you would probably still need a delay to assure the coin insert controller communicates the coininsert before the switching board goes back to the xarcade.
Oh, and I don't understand your data switch thing. Are you talking about making a switch w/ extension cords, or using a parallel or serial data switch and interfacing that with the dreamcast?
Thanks.
Yeah, a serial data switch. Just to open it and solder directly to the switching mechanism and mount the switch to a convenient spot on the cabinet. A cheapy Audio/Video selector might work, too. Actually, If you can find one that is powered and latches the inputs maybe you can hack a momentary trigger to the coin insert controller's connections (while momentarily disconnecting the X-arcade as you would have for the DIY switching board idea above.