Mame currently only emulates the 8-way inputs in blitz (and other midway/atari games that could use 49-way sticks). If you switch the dipswitch, you can't control the directions.
So you're saying that there is no 49-way support in MAME 
Not for Blitz, no.
The older 49-way games, yes. (Sinistar, pigskin, arch rivals)
The MAME devs seem to not care at all about emulating original controls.
While inputs are not as high on many Dev's list as other parts, most do care.
However, the main problem with the Blitz's (but not the gauntlet's which are the "same hardware") is blitz has an extra "multiplexer" board just for 49-way joysticks. It has multiple non-standard connections to the PCB that (AFAIK) are not documented. Emulating/simulating this will Not Be Easy without a working game with multiplexer & four 49 way joysticks, IMO.
You have a spare running blitz PCB & 49-way multiplexer? (I'll cover the 49-ways.)

FWIW, it will be easy to add 49-way support to the Gauntlet games OTOH, since they don't use a multiplexer, but connect very normally (8 digital inputs per joystick). Why the heck did the blitzs need the extra hardware, while the gauntlets on the same hardware otherwise don't, I don't know.