The D-pad on the PS Vita is really nice. It's miles ahead of the PSP's and Dual Shock 3's island-style design. But to do a fighting game like Ultimate Marvel vs. Capcom 3 justice, you have to use an arcade fighting stick. This Japanese modder spares no expense at doing just that.
The modder who goes by "imaginglabo" on YouTube didn't provide much details, but thanks to the power of Google Translate, we know that the mod is removable, so the wiring can attached with relative ease, the rear touchpad is nearly impossible to access and, yes, he had to gut the PS Vita a little.
As you can see for yourself, the mod is quite responsive and the joystick works beautifully for controlling Ryu. YouTube user "imaginglabo" isn't some silly willy newbie at modding. Some of his other mods include hacking a PlayStation Dual Shock controller to work with a Nintendo 3DS and a using a Logitech Gran Turismo driving wheel to play Mario Kart 7 on 3DS. I recommend you hop over to his channel to check them out. They're pretty sweet.