I've seen some people set up Player 1 and Player 2 controls to both work and hope they don't screw with eachother.
This is your best/easiest bet to get the outcome you're looking for.
Map P1 and P2 stick/button to P1's inputs and hands off your controls during the other player's turn.
I was thinking if you could make mame like cocktail mode in this situation where it switched to player 2's controls, but didn't flip the screen? 
Friendly word of advice:
- Don't even
try to pitch this to the MAMEDevs. Guaranteed. Hostile. Reaction.
- It goes against the objective of the project -- documenting the original hardware/software.
Quick and dirty guess about what it would take to change SI "cocktail mode" to your "pedestal mode" in MAME:
- Know how to edit MAME source code.
- Study the SI cocktail schematics and theory of operation.
- Figure out how the video is flipped. (order of bits going into video RAM?)

- Edit the MAME mw8080bw.cpp(?) driver source code to disable video flipping.
- Compile the modified MAME source code.
Scott