Well, you ALREADY ruined what was the best Yi Ar Kung Fu sideart I had ever seen.
Now, why are you feeling restricted? Defender is one of the easiest cabinets for Mame use. There is plenty of room for the standard Streetfighter layout on the panel. Defender is actually slightly wider than most 80s cabs, plenty of which saw Streetfighter action later in their lives.
First off, just pull off that original panel, it is just wood. Make a new one, out of wood, and drill your streetfighter layout in it (You need about 18-19" for a Streetfighter layout, you have 24", which is PLENTY of room. If you want to use Wico sticks, then either get the long handled ones, or just cover then entire panel with a thin piece of sheetmetal, and cut out little rectangles so you can mount your Wico sticks directly to the sheet metal (you can use pretty thin stuff when you do it that way).