I've used this kit a number of times. The encoder and adapters are the only xarcade parts worthy of arcade gameplay. Their buttons, switches, and joys are cheap knockoffs and the stuff in your hotrod is HAPPS parts.
The Xarcade adapters connect to the encoder via a DS9 (serial) connector which you can get a switchbox and simple push a button or turn a know in order to make the controls compatible with whichever adapters you use. Yes I have done this before in a cab (Dreamcast, Xbox, and PS2). The switch isn't anything you'd have to build. You buy a serial / data switch which can be had for $10 from most computer / electronics stores and some cables. If you cannot find a DB9 switch you can use 50 cent adapters and use a DB25 data switch instead.
The cab I've done this with is in storage for the next three weeks (moving to AZ). Sorry no pics but it is very easy to do.
Hope this helps,
-Goz