I have arcade cabinets but i have friends who like to use their own stick/pads/hitboxes to play the jamma games. I thought this device allowed you to plug in most usb controllers.
Yep, I know lots of people who have done this. Some people want the option to use both the built in arcade panel controls or some other controller they are more comfortable with. We've done that at various EVO side tournaments and there's even cabs at the Mikado game center in Japan that did this on some of their machines (I think for Guilty gear or some game that also had a home release, so people could bring their pads).
I've never seen photos of how they wired their stuff up, but electrically, the Decoders just go in parallel with the existing controls. You do not need to isolate them in any way. The signals all play well together. I would put in a vote for either some sort of JAMMA pass through PCB that you can wire into or if your cabinet already has the control panel wires running into plugs that detach, you could make your own pluggable extensions with wires coming off to go to the Decoders.
-ud