This is really wonderful. I've tried a couple of roms and that are the results:
* GTA - very playable
* GTA II (bios) - very playable
* San Francisco Rush - very playable
* Lomax - very playable
* Destruction Derby 2 - playable
(Edit: Looks like blues2 got this idea before, but here's my expansion of his concept)
As for the L2/R2 issue. Couldn't this be solved by using a touchscreen? Make an area of the screen that works as L2 and the other that works as R2. Simultaneous pressing of these two buttons could also be achieved, since in a single touch screen if one presses two areas of the screen at the same time, the touch point will be detected in the middle between these two areas.
Here's the visualization of my concept:
Picture A ) shows the layout that would be better for operating exclusively using the right hand thumb, while picture B ) shows a layout that can be operated using both hands thumbs.