jackrae:
Didn't see any mention about having to fit into camera body or about transmission through water. It really is up to requestors to properly specify their constraints before asking questions with minimal facts.
In my original post I said there were space restrictions and it needed to go into a housing. My apologies I guess I should have added this is an underwater camera housing.
The camera is a Oly EPL3 and a Oly PT-EP05L which has front LED lighting powered by 2 AAA batteries. This lighting is pretty useless and I dont use it so the space can be used by my project.
I have a wired remote that activates focus and shutter, these are simple switchs that drive the input low. I have already hacked it. So its not the USB wires as such but wires in the 8 pin mini/micro usb plug. Im not sure this is the correct pin out but similar... Olympus E-PL2, E-P2, E-P1, E-620, E-30, E-400, E-510, E-520, XZ-1, SZ-20, SZ-30 MR, SP-565, SP-570, SP-590 cameras USB/Video/shutter connector and USB cable pinout diagram @ pinoutguide.com
Just to move the goal posts 
instead of just 2 controls I may want to have 4.
- tells when to focus ( probably not used in reality as I will manually focus)
- tells when to take pic
- tells it to automatic take a pic every second
- tells it to stop taking a pic every second
(5.)Hey, lets add another to change the time it takes pics. So maybe every 3 seconds or 5 seconds could be an option.
Really 1 3 4 and 5 are not that important. They can be controlled via the arduino.
I also have a Canon G11 that has the CDHK hack and I can manually program the camera for time lapse but I would rather have the arduino control the time lapse so it will not take pics when the arduino is powering the stepper motor or else it will blur the photo with motion. But its flash no longer works and it does not take as good pics as the oly.
Anyway... how about this.... http://dx.com/p/2272-m4-non-lock-4-way-wireless-remote-control-module-w-receiving-panel-148825?item=1
Any idea how it works? will it drive pins low ( or hi) depending on which button is pushed on the remote or does it put out data?