At the risk of sounding like paigeoliver, I'd install an older version of mame on your 700mhz system. Something like mame .55 will have almost all of the popular fighters and side scrollers that you say you like, and it runs significantly faster.
I put .55 on a 450mhz AMD machine, and almost everything ran perfect. The only place I had trouble was Mortal Kombat and some NeoGeo games off the top of my head.
I also have .55 on a 900mhz athlon system that will go in my bartop and everything i've tried to run worked just fine.
There really aren't a whole lot of games you'd be missing out on since .55 . Unless there are a few games that were added since then that you just HAVE TO play, i'd go this route. If all you are doing is MAME and older emulators, that 3.2 is not living up to its potential AT ALL.