Here's a crazy idea. So I've been doing a little on-line research into the Microsoft InPort mouse adapter (not to be confused with their earlier bus mouse adapter).
Apparently, the InPort card was built around an Intel 8255 chip, and thus processed the readings from the mouse in parallel, as opposed to serially. Also, the sampling frequency was configurable and it had a higher flexibility w.r.t. to what IRQ it could be configured to use, compared to the serial ports, which could only use either IRQ 4 or 3. The InPort card even supported an "IRQ-less" mode, which I assume would require the driver to periodically poll the card, for instance by hooking the timer interrupt. A bit more tedious to support at the driver level perhaps, but it could be a nice fallback option for systems that lack free IRQs.
Anyway, all of these features appear to make the InPort card superior to serial mice. Also, the InPort card had good support in Windows versions both old and (relatively) new. I believe even Windows XP still had an InPort mouse driver included.
As for DOS support, I know Cutemouse doesn't currently have support for Microsoft InPort cards (or such a hypothetical "compatible" device), but I'm guessing it wouldn't be too hard to add such support, for people who refer to use an open source mouse driver in DOS. For everyone else, you could just use the existing Microsoft InPort mouse driver for DOS.
So how feasible would it be to develop an ISA card that would be software-compatible with the Microsoft InPort mouse card, but would be hardware-compatible with PS/2 mice? Wouldn't that be better than emulating an 8250 UART chip, including the buffering, due to it being serial interface? Also, would there still be a way to support the mouse wheel that way?