Hey kenster, I did this on an atmeg168. I dont use Arduino but you could I would think. The best way is to use a 16 mhz but I had to pull it off with a 12mhz. The only draw back is it only works with the oem DC controller. Just so happens the patents was wrong and its was 9 clocks from bit to bit not 6 
It is funny because do to the patent madcatz useds a 6 clock, thus I cant read that fast. If you design on a 16mhz you will be able to read the madcatz.
I did it all in asm as timing was so tight, but it does work.. If you are interested at some point give me a shout.