[Malkavman]

My thoughts:
I believe that 168 cards would not be enough to carry the scope and breadth of the Munchkin oeuvre when you consider the sheer number of cards available. Out of the thousands of cards, I would posit that a deck that small, when the cards were cherry-picked(not the intention of the game, mind you, but I admire your idea), would contain all of the most awesome treasures, the craziest baddies, the wackiest doors, the harshest curses, and the most powerful races/classes/etc. That would then make for extremely quick games and probably unsatisfying for some players.

My procedure is thus:
Blend everything, EVERYTHING together into the decks of doooom. Then remove a representative sample of about 3 inches of deck from either pile to play with. Add dungeons, seals, Fairy Dust, Munchkinomicon to taste, and commence play. If you play several rounds, reshuffle. Get to know these cards. Then, the next time you play, replace the representative sample, and begin again, setting the others off to be reshuffled when the process dwindles the cards to less than 10% of the whole. This works extremely well, and the play never gets stale.

HOWEVER, if you are set on a static "ultimate" deck, I suggest at least double the amount of a standard set to get a good cross-section of the various genres.

Just my 2 cents, YMMV