This is a great game to play. In real time, it is challenging but not unfair. Especially in the later levels, you will lose lives if you are caught off guard.
I made a very sloppy first draft test run of a possible TAS run of Space Invaders Extreme. It will be redone in the future if people would like this type of run (and it will be played on hardest levels up to 5D). I will post a link to the test run video as soon as it is finished uploading.
For Space Invaders Extreme 2, the structure of the game is changed a little but it makes it easier to speedrun. The Bonus Round alien waves in Extreme 2 happen at the same time as the main waves, so the speedrun isn't exactly interrupted (unlike in the first game where the bonus round wave in a way interrupts and replaces the main wave you were currently at.)
Having beaten the second game on Extreme difficulty after getting my butt handed to me many times, I think Space Invaders Extreme 2 is just as good a game to TAS.
Edit:
Test run of Space Invaders Extreme:
http://www.megaupload.com/?d=3CE8UYXW
When I was watching the video I was thinking of two words: "potential" and "untapped". Then I reread your post and saw it was very sloppy by design. Which begs a question: if you were willing to demonstrate how the TAS would be going to look, why not make it at least close to how it would look? Pretty much the only reason I got any enjoyment out of it was due to the game being an assault on the senses — in a good way.
But all that aside, if a TAS of the second game makes the first one effectively redundant, it might be a far better idea to start with it instead.
Do you have any estimates on the completion times for either game? Also, what other modes may be suitable for TASing?
To be honest, I made this test run some time ago and I was lazy and a TAS noob when I made it. Rather than going frame by frame, I slowed down the game. But I did focus more against the bosses than against the main waves. This semi-TAS was for me to see the potential of an optimized run.
As for the total game time, I would guess 10-15 minutes for both Space Invaders Extreme 1 and 2. I'm pretty sure each level would be around 2-3 minutes long. In both games there are 5 stages but after stage 2 they branch off in difficulty depending on your score ranking (Rank B , A, or S give you the option to choose a harder branch)
In Space Invaders Extreme, you start with Arcade Mode, Ranking Mode (like Arcade Mode but without unlimited continues), and Multiplayer mode (where you can go against another player or computer). Then there are unlockable modes: Extreme Mode (more difficult Arcade), Stage Mode (playinga single stage), and Endless Mode (play all stages without a boss). In this game, I would think Arcade Mode with a 1-2-3B-4C-5D route would be the ideal approach. When movies can be made off saves, Extreme Mode and Endless Mode can also be tackled.
In Space Invaders Extreme 2, you start with Score Attack (the game records highest score), Time Attack (records the fastest time), and Multiplayer. Extreme Mode and Stage Select are unlockables in this one as well (Extreme being the most ideal when movies can be made off saves). I would go with Score Attack over Time Attack because then you can also go for high score as well as speed; plus, killing enemies quickly usually leads to higher scores anyway.
I would suggest waiting until recording from a savestate is available and TASing SIE2 Extreme mode as an interest gauge. If it flies well, maybe there will be interest for another mode.