Hey Kabona
My initial thoughts are that there are two ways of doing this:
1. Make a circuit that takes the output of the controller as input, manipulate the input in the way you want, then forward the manipulated data to the xbox
2. Make a circuit that is implemented between the buttons and the internal electronics of the controller. (like you suggest in your lates post)
I have no experience with the xbox controller, but I did a little Google search and it seems to be a USB device right? So for option 1, you would need a circuit that both act as a USB host (to receive data from controller) and a USB device (to send data to xbox). You could probably do this with a Beaglebone Black.
For option 2 the circuit would be very simple, but the wiring might be very messy depending on how many buttons you need to connect to your circuit..
Connecting the buttons to an arduino should be just fine, you just need to make sure you provide the right voltage levels back to the controller board.
Cheers!
Oyvind