If the host of the original poster's system is not a PC, your approach is correct, though protocol difficulty still remains as I mentioned in "Handshake?". In this case, we cannot intrude into the host device, so we should make a board that intercepts the USB line physically.

However, if the host is a PC, we can intercept the USB communication inside the PC using a filter driver as I explained in "Filter driver". This is the "software solution".

Filter driver is an established technique, mainly used for printer drivers to support variety of printer protocol. You can find an example in Windows DDK.

Tsuneo