About the legal issues. Afaik, if a company makes schematics available then it's perfectly legal to simulate them, as long as you don't physically make them. The U.S. patent office doesn't allow you to patent an idea, rather a physcal product that uses said idea. As long as the idea is still floating out in the ether, you can think up new ways all you want.
With that being said, I'm suprised nobody has suggested just building a pong board. They sell kits all the time and with modern circuitry, you can manage to make the cb small enough to fit inside a controller. Then get a set of 360 pots from rat shack and make a small enclosure for both paddles.
Also this is the only practical way to play pong. Think about it, with most pong versions you need two players that means two paddles. Not two spinners, two paddles. I dare you to find a mame cab with two paddles on it.