The switches in a PS2 controller are variable resistance. A lite touch gives about 5000 ohms and a hard press gives about 100 ohms. Will 5000 ohms pull the OI digital inputs low? Our team wants to use a PS2 controller and we don't want to go down the pic interface shown in the white paper. CTS makes 100k joysticks that are a direct replacement for the ones found in a cheap 5$ Radio Shack PS2 controller. If the variable resistance switches will work, then this is an easy hack. If anybody is interested these joysticks from digi key fit perfectly in allot of PS2 controllers.
http://www.ctscorp.com/components/Datasheets/252.pdf