The Lego idea is really rocking. Plus I can just see my little kid trying to use the panel as a base for his/her Legos. Another thing to look at could be using DUPLO blocks instead. The bigger nubs might resist the abuse better.
But I see one minor problem. Let's simply the problem for illustrative purposes. If I understand what you're saying, each row of blocks represents a conducting rail. For Shits and giggles, let's imagine we have an imaginary giant 30 x * block where each row of nubs represents a rail. So using our crude electrical example we have something like this....
1 ------------------------------------------------
2 ------------------------------------------------
3 ------------------------------------------------
4 ------------------------------------------------
.
.
.
30 ------------------------------------------------
Where each numbered rail represents a connection to the controller.
Now if we place a joystick block on the rail to the left. It would (arbitrarily) tap into rails 1 - 4 for player one controls. Then we drop in a 2nd block for buttons tapping into rails 5 - 12, then a third block for player 2 controls which
should tap into rails 13 - 16. However we have a problem, if P1 joystick box is made identical to P2 joystick box, it would tap into rails 1 - 4, not 13 - 16 like it should. If you make P1 and P2 joystick different, it wouldn't be "guest" friendly because they would then have to figure out where to place each joystick.
If this is what you have in mind. The only solution I can think of at the moment is a toggling system for P2.
Let's say you go with the rail system. Add an additional two rails 1/2 way across the panel from the left to the center. Any box that touches this rail modifies the internal circuitry to use the P1 specific rails. If it makes no contact, then it uses P2 rails. The drawback is you might have problems with single player configurations and you'll have to be careful on the sizes of the boxes.
I've got a couple of other ideas to handle this but they all center around the same basic principle. Such as a left-right notching system using spring loaded switches

I'm a tad behind on my LEGO knowledge. The last LEGOs I had, they were just coming out with the powered bricks. I just checked the website and I couldn't find any place where you could just buy the older style powered bricks, nor could I find any place to individually buy the bricks used in the Mindstorm kits.

It's a damn good idea though, I'll keep researching it to see if I want to use it rather than my original idea.