Your engine is a B5.9, not an ISB- unless you replaced it.
That short cable goes to the throttle positioner(the black box) it tells the transmission at what throttle opening it needs to shift at.
Don't mess with that.
The hydraulic thingy you see is the air piston- air drives the throttle if you have air brakes on your MH.
Yes- you can replace the foot switch with an on-off switch. The PO on my 96 Monaco did. Just connect the wires from the foot switch to your on- off switch locating it where you can get to it easy.
Your exhaust brake should release when you get down to idle rpm- there is another black box called the VIM that automatically releases the EB when the switch is on.
Now I'm going to mention a device called Brake Switch.
http:www.brakeswitch.com/
Read about it. I have this on my MH and it works fine for me.