2. Since the cab will be small I am wondering if I want one or two joysticks. The CP will probably be 20" wide. Will the CP be too crowded (especially with 2 players at once) for 2 joysticks?
I think it will be too crowded. I have a 2-player SF setup on a 24-inch panel, and that works, but spacing was a bit tight. If you have three buttons per player, you have basically a SF setup, but if you can trim it to two . . .
Basically it depends on how often and what 2P Simultaneous games you might want to play.
3. I'm only interested in 80s era arcade games. 90% of the games I want to play are vertical, so my plan right now is for a vertical monitor. However, there are a few favs (Joust, Karnov) that I really want as well. My monitor is a 17" PC monitor. I've seen some people with rotating monitors. How much of a pain is that and is it worth it?
IMHO, setting up a rotating monitor in a small cabinet you are building in-site, would be pretty complicated. A rotating LCD would be simpler, but if a trackball is out of your price-range . . .
Personally, I have a 17-inch PC monitor (no cab-though) and use it horizontally - although vertical games would look better rotated. (I've tried it with them rotated and sideways and they look better).
I recommend trying all the options with the current monitor and see which options you can like with vs. the number of games you will play on it.
IOW, leave the monitor horizontal -
MAME 1942 = Letterboxed on sides, but playable.
MAME 1942 -rol = Sideways but looks good
MAME joust = Correct and looks good
MAME joust -rol = badly letterboxed top and bottom.
If you think you won't play joust real often and can live with the letterboxing, put the monitor vertical.
If you can't stand joust but can live with 1942 letterboxed, put the monitor horizontal.