wow this one really went long... bear with me
The IPAC reads a button press event when the voltage on one of its pins goes to zero. That's why you have a ground loop between all your buttons, with the other side of the switch going to the IPAC. When you close the switch it grounds an ipac pin, and when you release a resistor on its pcb pulls the pin back to 5v. I know, it's so tempting to just assign anything that's "activated" or "good" or "positive" to logic 1.

I did it too when I submitted diagram A as a shift-button toggle back a ways.
You can use a double-throw switch in place of diagrams A and C, yes. You'd just put the center pole to the IPAC, and put the signals RF#1 and Button#1 to the other two.
The chips have the advantages of being a button you can smack just like everything else on the panel, and being able to control several buttons with one switch which you can't do with a double-throw.
Or you could replace diagram A with a double throw switch, running the center pole to diagram C as the signal labeled TURBO, and the other two poles going to 5v and ground, and that would also control several buttons at once. (but would not be a button you can smack

I guess I just like smacking buttons!)
It might also be simplified by using a single oscillator (B) that oscillates all the time, and connecting its output pin to the Com pin of all the buttons you want to rapid-fire. But two things would happen: the chip would have difficulty driving more than 4 buttons (too much fanout) and would need a helper chip for this, and you would not be guaranteed a button-press the instant you tap the button as you are here. (each button would wait to press until the oscillator went low again, when they would all press at once.)
You saw the picture I posted of the circuit - that protoboard had one each of circuits A B and C. It's not really all that bad. The 6-button street fighter layout would be though. It was just an example.
What's great about these circuits is that each has a modular function - you can use circuit A to toggle just about anything, diagram C to switch between any two things, and diagram B to make anything... um... vibrate. For example, you could have two separate, independent button configurations - say for one config, the center two joysticks of a 4-player board would be players 1 and 2, and the outer two wouldn't be connected, and for a second config they could be labeled 1,2,3,4 in order left to right - you can accomplish this using circuit C, without needing the shift function. In which case, you could have four configs you can toggle between by flipping the shift key and your switch in different combos. Or you could cause diagram B to make a deep "BeyYOOooooo" over a speaker every time a coin is inserted (with a transistor and capacitor in place of its voltage knob.)