Dave,
I actually have that adapter, but I didn't get it to work with my digital joystick. I'll have to give it a go again on my PC, just for kicks.
What does work, however, are those PSX to USB adapters. I have one of those where you can connect two controllers on one, and you do not have to install any drivers (unless you need functionality for force feedback I believe), so a simple PS1 joypad I connected was recognized on my Mac with MAME no problem :-).
So I was looking all over and now scored this joystick on eBay:
It seems to be comparable to the X-Arcade that Perry mentioned, but for half the price. Also, the button layout on the X-Arcade seems a little low compared to the joystick. Has that been an issue for you, Perry?
And the two-player X-Arcade just wasn't an option, not only because of the price, but also due to its size. Interesting to learn, though, that it connects to the PC via PS/2. Maybe you could use the PSX connector and one of the adapters I mentioned above?
Can't wait to get the joystick and try the baby out. I refuse to believe that my reflexes have gotten so bad; I'm blaming the controls I have right now for my lousy scores ;-).
-Christian