I've been preaching the gospel of Propeller the last two years at the Cinn. Commodore Expo and while the expo itself sort of crept on me before I could get this project done, I've put my "money where my mouth is" and got a project using the Propeller Microcontroller as an accessory to the Commodore 64. Pictured is a Propeller Protoboard with a couple interfaces. The interface to the right is a simple NES controller connection tied directly to the IO lines of the Propeller chip. The interface to the left is a simple NPN transistor circuit connected to an additional 5 pins, and has a Atari joystick plug on the output. Currently the Propeller is programmed with program to accept NES controls and pass them to the Atari port as joystick inputs. It works perfectly.
The Propeller has a reasonably large library of code which can be incorporated easily with this interface. NES, SNES, GAMECUBE, PSX, MOUSE, and N64 controllers. Want a Wiimote for your 64? There is even accelerometer code I plan to implement next! My entry for retrochallenge is to build a skateboard interface, allowing me to play "Skate or Die" on a real skateboard. Step one is complete.. It's a matter of mechanics and software now.