I believe all the audio is routed through the Kaoss pad (KP) and the fx are applied there when this is happening... It isn't a case of the KP sending midi messages to Ableton and Ableton applying the fx.

From what I remember (been about a year since I touched one) the KP can be set to apply fx only when you are touching it, and then you can lock those fx in if you like them somehow as well.

Some people go even further with it and record the processed track back in Ableton @ the same time, or use ableton to apply EVEN MORE fx on the track rerouted back in to Ableton. I know lol /head asplodes.

http://forum.ableton.com/viewtopic.php?f=2&t=125624

Cubase's native bitcrusher is pretty sick. Haven't bothered checking anything else out, this thread has inspired me too! You guys are legends!

Oh its very simple.
First of all I use the kaoss pad as a midi controller here. All sounds and effects are from within Live.

It kindo boils down to personal prefs.

Knobs: you could map your filters to a macro, and make it so they only turn ON after the macro goes from 1 to 127, so 0 is the OFF position.
You could use a knob + a button where the button turns ON the FX.

Pad, the pad has 3 controls. Pad On/Off, X position, Y position.
So you map a filter to the X or Y and the ON/OFF to the Pad On/Off.
And then some other effect to the remaining X or Y.... to go all crazy. And maybe you can choose to not map a On/Off to the pad for the second effect. Or have them both do OnOff or switch between.

blabla yeah its kindo endless what you can do here. just think of what you'd like to do with the device + software and build it in live.

DBlue Glitch is nice, its a very very small file in DLL form that you simply drop into your VST folder inside of the program folder you use for sequencing.

http://illformed.org/plugins/glitch/

Windows-only...