I would go the X arcade route, but take care on the direction of connecting the cables to the master PC or Console.
Your console will have a 9 pin serial or USB interface coming out of the controller housing.
You want something that will not be far away from the PC or screen.
If it is a desptop pc situation you can have the switchbox, instead of unhooking everything.
Another option would be hacking a control pad to each host controller, and like you say make them wireless.
Madcatz are a good controller to do hacks to.