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Yeah probably it's just the shift register that spits out zeroes instead of the START and SELECT data in the hardwired controller II when reading it. If you somehow connect a controller I (or a NES controller) on the PCB connector START and SELECT will probably work like on an AV Famicom or NES. It would be interesting to add a microphone to a controller I and a PCB connector from a controller II to get a Famicom that has both a microphone and START/SELECT buttons.

Yes the Famicom controller 2 has the same 4021 8-bit shift register as the others, it just has the pins for SELECT and START hard wired to 5V. You could relatively easily reconnect those to two new buttons.

I don't know what you mean about "add a microphone to controller 1", though. There's only 1 data line that's ever listened to for the mic (D2 on $4016), so having a second microphone won't be able to do anything. You'd also have to replace its cord with one that has more wires to accomodate the extra line. (The mic is a dedicated line, it's not part of the serial input from D0.)

I don't mean add another microphone, the goal is to add START and SELECT buttons on the second controller while keeping the microphone.
I mean to use a spare controller I or NES controller and add a microphone to it and connect it instead of controller II, not instead of controller I. I figured it would be easier to add a microphone to a controller than to add good START and SELECT buttons to a controller II. You would need to steal the connector from a controller II in that case though (a controller I connector won't fit).

Ah, yes that makes sense.