Yes, it does an online verification thing. I'm leary of these type things because of spy/adware and I keep the MAME cab pretty isolated from crap. I'll look through the processes to make sure nothing sketchy is running.
The game is pretty cool. You can remap all the control keys, but it still requires you to use the spacebar and escape key to do certain things. Has really cool hard rock track that gets you psyched to play. The gore aspect is kind of funny. When you blow up enemy ships little Defender style guys fall out, and you can shoot them and create a blood splat.
The weapons upgrad menu was initially a bit confusing to me, but after messing around a little I figured it out. Its very hard if you just play without buying a bomb or weapon upgrade right at the start.