You should be avoiding joystick encoders, they add more input lag in MAME than keyboard encoders.
This really couldn't be further from the truth. At the system level, joystick controls are given high priority, as latency is very undesirable in the applications for which they are used. Conversely, keyboard priority can be lower, as people typically can only type so fast, and low latency is far less important for keyboards. There's also the fact that the USB gaming control reports use bitmapped representations of buttons, meaning that these require far less processing at the system level, and require as much as 1/8 or less of the data required by keyboard key reports to travel over the USB bus.
However, every interface is different, and latency is very dependent on the manner in which the hardware is implemented, and the quality of the device used. Just because you found a cheap joystick controller which doesn't perform well, is no indication that all joystick encoders have those kinds of issues. It's very much the same as driving a 1982 Geo Metro, and concluding that all cars can only reach speeds of 75mph, and get 32mpg.
That being said, a properly implemented device of either type, supported by a mature OS, is just fine for gaming requirements. Especially in the case of older system emulation, where inputs are usually only read at 60hz (about 16ms). If the controller latency, combined with the system processing of those events ends up beyond that, you might notice. Otherwise, there should be few, if any, issues.