Sorry to resurrect an OLD topic, but just wanted to clarify some tings.
Linux is a multi user system, thus, things get installed in such a way that all users of a system can use them, yet retain their own settings.
Thus, everyone has access to the basics; the binary, the roms (in /usr/local/share/games/mame/roms), and then global configuration files go in /etc/ (thus /etc/mame/mame.ini and such).
You, as a user of the system (maybe the ONLY user of the system) can have your own overrides, and custom configs, they'd go in your home folder, which would be ~/.mame/ (which is linux shorthand for /home/username/.mame/) Files in here (such as mame.ini will override anything in /etc/mame/mame.ini)
to answer questions (although, you most likely figured it out by now):
1) if you want to do it system-wide (for "everyone"), edit /etc/mame/mame.ini, if for just you, edit ~/.mame/mame.ini (best to edit this one)
2) Tricky, I'd guess create it in ~/.mame/
Hopefully, this comes in handy for the next person that tries to understand the directory structure.