In-Line USB Monitor?

Would it be possible to attach USB ports to an arduino and monitor the communication between a computer and a device with it?

I have a project that this would be really useful for.

The short answe is no :-)

Arduino is not a USB device, and it doesent really have the horsepower to do what you want.

Unfortunate. I don't need anything too fancy... not like monitoring file transfers... I'm curious about monitoring HID's specifically.

Answer is still correct... A PC is better suited to the job.

Here's a commercial product that will do it:

Given that it's ~$1000, that should tell you how far away from possible it is to do it with $25 hardware :)