A major step in this project is to determine what the Atari can physically handle. After that, I can plan out all the features, then start developing those features. I haven't found many good resources yet on Atari inputs and outputs, but this looks to be a good start:

http://www.atariarchives.org/creativeatari/Interfacing_Your_Atari.php

I will be going through that shortly to compile a list of realistic capabilities for the Atari 1200XL, regarding physical interfacing.