Interesting. I was just starting a similar project. I was planning on building a case out of legos but this, this is much more interesting. I plan to get a via edan board, I already have everything else including a half height power supply. However, lets skip over the consoles. Which Atari computer would be the best for such a project? I assume it would have to be a TT or Mega ST since I imagine those with a built in keyboard would be just too hairy to mod.
/edit: BTW as for the psxpc being a "prime candidate for overheating", wasn't that ALWAYS the case for the PSX?