IMO, a 4-way stick isn't as necessary as it's made out to be where MAME is concerned. Especially for the casual gamer who doesn't take their game too seriously. The games can be played just fine with an 8-way stick as long as you don't linger in the corners. Pacman/Ms Pacman is very forgiving, at least in recent MAME versions. Donkey Kong and Burgertime probably benefit the most from a 4-way, but are still playable without one.
I've found that an octagon restrictor helps a bit as it guides the stick to the primary directions when you slam them in the general direction.
If you want it to be the "best it can be", yeah you'll need one that switches automatically.
For some people, it's more about the joystick being physically restricted than about it not tripping the diagonals.
I get that a square restrictor with deep corners and no defined primaries just feels wrong, hence my comments about the octagon restrictor.
While the octagon restrictor worked well (even for diagonally mounted games like Qbert & Congo Bongo), I grew to dislike the bumpy movement when doing circular motions in fighting games.
I'm currently using round restrictors and have an odd homemade setup that decreases the sensitivity of my optical switches when a 4-way game is launched so the diagonals don't register. In the end, it's probably equivalent to the U360 for 4-way games and I don't feel that it's inferior to other solutions. With any auto-switching system, you'll have the hassle of more setup on the software side.