This sounds really cool. I've often thought of this myself, but I know I don't have the technical know-how. Keep us posted with pics and stuff so we can see how this turns out!
will do on the pics. this should be easier then the other portable im working on (relocating the cart slots is a huge pain). and as for the custom controllers, maybe ill make a super nice arcade stick since i dont really like the ones that were made for it.
ill do a how to and take pics of the steps i take for this. this isnt too hard.
pretty much this is it:
remove mobo from pce
remove screen from casing (you dont have to mod it for leds)
desolder power jacks on pce and screen. desolder av jacks on pce and screen. desolder controller ports.
solder leads from av on screen to av on pce mobo
solder batteries to the correct power points on screen and pce. connect also some leads to run to a power jack to allow charging without removing batteries.
the easy way to do a controller is to solder switchs to the traces on the button contacts on the controller board itself then mount the tact switch to a perf board and put a little hot glue on the bottom of the original plastic buttons and place those over the tacts. then solder the leads directly to the pce mobo.
mount inside a case (either store bought or homemade)