Guitar is of no help what sover, just having a sense of rhythm is. Put it this way, my brother played guitar for 4-5 years before getting guitar hero, after 2 months, he was just going through Hard. iamchris4life on scorehero had never played guitar, only DDR, but after 2 months, he 100% Misirlou.
I think knowing how to play the guitar does help but not in a sense of helping you get 100% on everything if that makes sense lol
I play the guitar and have been doing for quite a number of years now but i'm not THAT great at guitar hero, however I find I have better speed and dexterity in my fingers than anyone I know that doesnt know how to play the guitar. This does help me with hammer on's and pull off's and double/tripple chords and changes. I found I was happily using all 5 buttons long before any of my friends were and even now they struggle to use their little finger etc
The problem is that my rhythm sucks lol doing a repetitive sequence like in Paranoid I really struggle at lol so as you said, having rhythm is what its mainly about
As for the controller thing, Ultra's sister is just immense at that! lol