Anyway, I'm trying to figure out ways to deal with this and one thing I came up with was to have a cabinet designed to sit diagonally in a corner - the back of the cab would be narrowest, and it'd get wider toward the front (to accommodate the CRT and control panel).
Considering the cost of LCD TFTs today is dirt cheap (the Daewoo Pivot is totally awesome) that should factor in the issue about how far it sticks out. Family rooms are a great place to put a cabinet, but it shouldn't be a focal point that's blatantly obvious.
Obviously, the machine could simply be scaled down or down-graded. That's not what I'm talking about, though.
What I'm thinking of are ways to have the same hardware (big 25" monitor, full two-player CP with trackball, etc.) but with less wasted space. Consider:
The players, standing shoulder to shoulder, would need around four feet of width in order to play side-by-side at the machine.
The CP itself, however, only needs to be about 32" wide to accomodate a healthy collection of controls and space to use them.
The front of the monitor would be about 26" wide. The back of the monitor is narrower, and the monitor space actually ends after just a foot or so of depth.
So you see where I'm going with this? The cab only needs to be wide at the front. If it's tapered at the back it could potentially save a lot of space. If the cab needs to be deep in order to have stability, it can still have that - it'll just be a more triangular foot instead of a rectangular one. Or so goes the theory, anyway.
By comparison, if you stick a LuSID-like design in the corner - it'll take up a bunch of space, and you won't be able to put it right in the corner without wasting more space or jamming a player against a wall. Either you put the back of the machine against a wall, and slide it out so the player on the corner-side has some elbow room, or you turn it diagonally - which doesn't work so well with that kind of design. Machines like that, they're designed to be lined up side-by-side, not to be stuck in a corner.
I do want my cab to be pretty normal-looking, though, and that's one of the main reasons I probably won't specifically design it to live in the corner. But I did want to see if it'd been done, and if so how it played out.