Thirty-one years ago, I published an article in DEVICE newsletter (editted by Craig Anderton) that argued against going overboard with onboard, and my attitude hasn't changed much in the intervening 3 decades.
The gist of my argument is that one needs to concentrate on accomplishing in the guitar what can only be done on the guitar, and should be done on the guitar because it is done best on the guitar.
So, clearly pickup switching is best done on the guitar. Running a stereo or even 3-conductor cable out to a box where switchng would be done complicates matters immensely....which is why you generally don't see it. In the world of multiple pickups and multiple coils, there is plenty that can be done vis-a-vis pickup switching. A lot of the fancy-schmancy combinations and phase relationships end up producing negligible tonal differences when the amp volume goes up. I may be able to discern the difference between using THESE two coils from a pair of humbuckers, vs THOSE two coils, when everything is set to clean and I'm playing through the board and listening via headphones. But once I go to an amp with even a hint of overdrive, I am hard-pressed to hear the difference. People arrange for phase-flipping but rarely use it. Then there is all the series-parallel stuff, and in spite of having the pickups to do it, even a 5-way switch can't get you neck+bridge on a Strat or similar, unless you wire it up differently.
The punchline is that there are plenty of useful settings that simple switching can't get you, but the complexity of the system required to achieve them is burdensome. I think there is room in the world for a PIC-controlled switching arrangement that provides "scenes" in which the various configurations of pickups (coil-splitting, piezo bridge, series-parallel, Jaguar/Jerry Donahue-style bass cut on the neck pickup, etc.) could be programmed and a simple switch would be the user interface. So, the user has a 5-way wiggle-stick to select, and a momentary pushbutton to scroll through "scenes", each of which has a set of 5 pickup arrangements, intended for a certain style of playing or pickup utilization (e.g., an acoustic/crisp scene, a heavy scene, a varieties-of-snarl or chicken-pickin scene, and so on).
Buffering of the guitar signal - what you might call "signal preparation" - is something that CAN be done on the guitar, and done reasonably well, but doesn't HAVE to be done on the guitar. Don Tillman has a cute little idea in the FET preamp built into the cable itself ( Discrete FET Guitar Preamp ). What's nice about that is that the FET buffer/preamp is close enough to the guitar to buffer against long cable runs, but does not require getting into the guitar to provide power or change batteries. It also lets you use regular cables if you want or need to. If you're going to include some gain, in addition to buffering, at the starting point of your signal path, I don't recommend going above a gain of 2-3, simply because there are too many things between guitar and amplifier that anticipate a modest signal. My big epiphany came when I made myself a Tube Screamer to TS-808 specs, and simply hated how it sounded. Just could not see what all the fuss was abuot. Then I got another guitar, that came without the onboard preamp my other one had, and all of a sudden the pedal came alive, and sounded as wonderful as people said it did.
Some guitars have used active on-board EQ. That stuff can be useful, but complicates the instrument. If I was playing a bass and feeding a line driver running to the board and a power amp, onboard EQ would be just what the doctor ordered. But there is no guarantee that the onboard EQ would be appropriately tailored to the effects pedals I was using, and would necessarily complement the amp controls. Moreover, those tone controls could not be bypassed, like an EQ stompbox, couldn't be bypassed or altered without taking your hands off the strings, couldn't be placed AFTER anything else (like another effect), and add weight to the instrument. Like I say, some things are just best done outside the instrument rather than at the start of the signal path.
So there are some ideas. As for effects pedals, I suppose I shouldn't deter you, but as Bret and Jemaine so aptly note, sometimes there can be "too many dicks on the dancefloor" to provide anyone opportunity to score.