Update~
The main controller problem was fixed. It was in fact a power problem (not enough amps to go from the controller daughter board to two adapters and one receiver). I fixed this by adding an additional 5v/1a V/gnd from the Total Control Plus -> Ps2 to Xbox adapter.
It works as I want it now, and as an added bonus, it added a power switch to this complex so that I can activate the receiver without having to turn on the system. Oddly enough the extra power is enough to power the entire daughter board, so when the system is turned off, but the controller is turned on, the daughter board all lights up, and even the dreamcast fan runs.
(this might be a bad thing in the long run, so I'm not going to play with it too much, the idea is that the entire thing will be turned on at once, so hopefully this odd occurrence won't have any negative effects).
As for the mice, I collected a few friends USB wireless/optical mice, dating back a few years. None work, not even those claiming to work with a PS/2 downgrading plug. I specifically ordered one "mini mouse" that the box & seller claimed the mouse worked perfectly on PS/2 computer ports, and didn't require any drivers. And as with all the USB mice I tried, the receiver did flash/light up (when it had that option), as it was gaining power, but the receiver did
NOT work with the mouse.
I think its safe to claim that
NO usb mouse will work on the dreamcast, unless anyone feels the need to do more extensive testing.
I also, on a complete whim, bid and won a 99 cent wireless used mouse on ebay.
This mouse oddly enough works exactly as desired, having both RF frequencies, and being 3button + scroll wheel + optical. The buttons are assigned exactly as a dreamcast mouse is (in unreal tournament, the left is main fire, the right is alternate, pushing the scroll wheel in jumps, and the wheel selects weapons).
The wheel is although very stiff, and this mouse is rather sensitive to its surface (common early optical mice problem, not so much if using an actual pad). Without adjusting any sensitivity in game, it worked with ease, only giving me very slight grief twice when I looked strait up and the mouse decided to barrel roll on me.
Oddly enough I didn't expect it to work, and had already ordered an adesco wireless rf keyboard + mouse combo that has a pair of ps2 adapters (a very cheap $25 buy). Hopefully it works also, and I can choose the better of the two mice.
I also have a sun faded sega saturn japanese mouse, that I had planned on scrapping for parts for this. I'd like to stuff the (best) working mouse parts inside this shell after I do a wheel cut-out, and give it a fancy paint job.
On a bad note; I did break a part of the HD upconverter. I decided to save a bit of space by removing the male plugs of the VGA input on the board, and after soldering the 15 wires from the dc-vga box to the 15 pins on the upconverter, and tested it (still working), I removed the plastic port. It no longer seems to be working, and I'll have to dive head-first into this to figure out why.
I currently put two red clear lenses over the receivers hole so that it doesn't look "as bad" but I'll most likely do more work to make it look better after I get more done.