leapinlew: I don't think structural integrity will be much of a problem

As for joystick scale and usability...
Ok so I think I've figured out the controls. It was a lot more easy than I thought it'd be.. I remembered the original gravis gamepad has a joystick that screws into the middle of the D-pad. When I dug it out, I noticed the buttons are the perfect size for a 1/4 scale cab! I'm not a fan of convex buttons, so I took the buttons out of an NES controller instead. The great part about this is that NES, SNES, TG16, and possibly even PSX controllers all have the same sized buttons, so really I can drop in whatever button I want to.
I don't have the joystick to the gamepad, so I wrapped a screw in electrical tape and stuck a 10mm LED on top and blackened it with a sharpie. Then I threw it all together on the old mockup control panel I have and... it looks great! The buttons are slightly larger than 1/4 scale at 3/8" (1/4 scale would be 7/32") but if you think about it, NES buttons are the perfect fit in terms of usability... they're what I grew up smashing after all. I happened to have a model hand that is precisely 1/4 scale of my own hand, and next to it the control panel looks fairly proportioned.
To use the gamepad joystick I'm going to have to look into hacking it. Either by using the gamepad interface itself (it's ADB so I'd have to ebay a newer USB or PS/2 one) or by simply soldering wires to it and using an encoder.
Regular ol' microswitches mount perfectly under the buttons, and I can add a small spring if I want some extra stiffness.
As far as design goes, I'm still open to suggestion everyone

I'm now thinking about a neo-geo cab since I have all these little colorful buttons to use. Still only enough room for single player though.