The KVM should do what you want.  That will switch your Keyboard, Video and Mouse between different machines, hence the name.  All you need is a way to get your PS2 video to output a VGA signal.  There are various adapters to do this.  Lik-Sang used to be a good source of converters for controls and video, but I don't know where to look these days.  One solution might be a PS2 to HDMI cable, then an HDMI to VGA converter.  The current PS3 HDMI cable should work with the PS2 as well.
Also, I know most of the Iogear KVMs have a feature that switches to the other input when you double click a button (usually scroll lock but is also configurable).  You could just map one of your IPAC shift states to Scroll Lock, then when you for instance, hold Player 1 Start and double tap button 6, it would toggle to the other system.  If you have an extra IPAC input that's not used, you could also just have a dedicated button for this purpose.  But for all of this to work, you definitely need the IPAC/PS2 adapter.  There is no way I know of to send keyboard inputs to the KVM by just hacking PS2 controllers.
Hope this helps.
P.S. Just re-read and I didn't see that you were using a TV.  This complicates things a bit.  A KVM is usually made to switch VGA or DVI video.  I think there are some now that can do HDMI, in which case all you would need is a PS2 to HDMI cable, and a VGA/DVI (whichever your PC has) to HDMI cable to get your video to the KVM.  Then an HDMI to Component cable to the monitor.