Mounting a HP smart card reader inside a keyboard wasn't really hard as there was just enough free space inside. I had to do a bit of soldering - removing unnecessary connectors as they were to big to fit inside. Cutting out a nice hole required some skill, too.
The 'two cables' solution is ugly, I'm working on it. I could either incorporate a USB hub inside the keyboard (but then I couldn't hook the keyboard up to a KVM) or use Ethernet cable (but I'm not sure if USB can operate without proper shielding).