I did something like this when I was in high school. I bought and old arcade cab from the corner store for $40, and then gutted it and put my tv and PSX in it. It was nothing fancy, and I just had controllers sitting on the joystick panel.
I still regret not finishing my Halo cab. I got the joystick panel finished, using some old flight sticks that I hacked to work with an XBOX controller pcb, and started working on the cabinet art, but then I had to abandon the whole project when I moved to toronto.
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