I don't completely follow what you're trying to accomplish.
While I could technically skip the keyboard encoder altogether and just use a playstation USB adapter, there are some compelling reasons not to.
Haven't studied this in depth - 10 buttons plus joystick, how many were you wanting for action buttons, and how many are left?
Namely that I wouldn't be able to wire up the escape and pause keys in MAME, or wire up the coin doors to give me virtual credits.
Ermmmn, why not? Reconfigure MAME so Escape is Joy1Button10, Pause is Joy1Button9, Coin 1 is Joy2Button9, Coin 2 is Joy2 Button10. Switch on coin door goes to pad input for Joy2Button9, etc.
The former option sounds more convinient, but I'm not an electrician so I don't know if it's safe to be wiring three wires together for a do-it-yourself Y connection. If this concept of wiring both the keyboard encoder wires and playstation encoder wires to the same set of wires that are connected to the arcade controls is safe and will work, I think I'd be happy going with it.
I think you would be okay, especially if the playstation pad uses common ground, and almost certainly if the PS was off when the MAME computer was on, and vice versa. You might want to check with someone else, though.
Also, Lik-Sang and several other sites sell adapters that connect playstation controllers to Gamecube and Xbox. If my plans for making my controls Playstation compatable will work, I could also use my cabinet with GCN and Xbox just by buying a few adapters! 
Or with MAME with the USB adapters - what am I missing?