Here's the 411:
49-way sticks have 11 pins, two of which are ground, one power, and eight "direction" pins (4 for up/down, 4 for left/right). The "direction" pins are binary on/off, but each axis is not treated as a 4 bit data (more info why, below).
There are 3 sensors per axis, each sensor has its own "tooth". Each tooth is fairly wide, and is placed so a different tooth will covered or uncover at a different point in the movement. Each sensor's reading is "directly" output to one of the pins, a zero if the tooth blocks the sensor for pigskin/archrivals/midway game, but a one if the tooth covers the sensor for sinistar. The forth pin for each axis notes which side the of center the stick in on. The "seven" possible outputs for each axis is (pigskin/archrival shown):
0111 left or up
0011
0001
1000 center (logically the same as "0000" )
1100
1110
1111 right or down
The first digit is from the "non-sensor, side" pin, the other three are the sensor pins. There are two valid "center" outputs, because the "side" pin flips when the stick passes center, so the output for an axis will be "1000" is the stick moved to center from one side, and "0000" if moved from the other.
If it's not clear how the "counting" works, picture one really wide tooth and three sensors right next to each other. The tooth starting on the far "left" side ("0 111", "
0 111" for left, "0
111" for the sensors) does not block any sensors. As it moves toward center, it first blocks the left-most sensor ("0 011"), then the next ("0 001"). When it blocks all three ("x 000"), it is in the center. It continues moving, unblocking the left-most sensor first ("1 100"), and flipping the side pin to "1", in the process. It continues moving, ("1 110") & ("1 111"), finally stopping at the far "right" side.
(Yes, if you move the stick so fast from far left to far right that the the sensors don't see it, and stop at the far right, the stick will still think it's on the far left side.

)
So, to map a 49way directly to mame, you'd need 4 "buttons" per axis, 2 axes per player, 2 players per game (4 if you count dark legacy, ect, not emu'ed yet), or 16 digital inputs compared to 4 for a normal 4 or 8 way joystick. This is very do-able hardware-wise.
I could add in direct support for this it into mame if anyone wants. The way I picture this is on a per game basis.
There always is the "49way to hall effect" board ref'ed to from here sometimes. That should really be called "49way to analog" so people don't think it won't work on PCs, but I didn't design the circuit so I don't get to name it. [shrug]