Jakobud, I think your being a bit biased. Xcrap controller? I think not.
Actually it's pretty doable with the xbox as I've yet to find an xbox game that doesn't give you the option of using the dpad and by-passing all of the analog controls. Most of the games actually play pretty good in either mode too. Also since the xbox controller doesn't have all those buttons like the ps2 does, you generally don't run into the same problems we both pointed out in the previous thread. The two "L" buttons are the only analog buttons on the pad. Those two buttons are analog, but i believe the pots (or whatever) that they connect to are on a seperate mini board similar to how the old snes pads were done. But more info on that could be found at xboxhacker.net or some of the other sites.
Also the xbox has one feature that the ps2 lacks which makes it very tempting for hacking, namely it can run mame now!! I'm not talking about a crappy port either, it can run 80-90% of the mame games at full speed! You have to mod your xbox to run it though. There's a new german company that is promising to make a mod chip that will be very easy to install and allow the box to play 3rd party games and apps. There are already mod chips out there but i wouldn't reccomend them as they are hard to install.
Here's the link to the upcoming mod chip I mentioned.
http://workshop.mugenn.de/konsolen/microsoft/xbox/openxbox/index.php?showpage=startenglish.datI hate to say it but your right on the psx2 though, it's just too difficult to hack, mostly due to the fact that the controller has way too many buttons and game authors never give you the choice of using the d-pad.
And for the record hacking the xbox to play xbox games with arcade controls is rather pointless. There aren't ANY arcade style games on the xbox except for maybe doa 3. Trust me the xbox games require time to finish and you don't want to be standing in front of a panel while playing. The mame element makes it a good hack though.