Bigmoe seems to have a good handle on the answer's so I'll stick to questions here.
A very good point. I don't think it would be difficult for the industry to convince the "average" juror that the software itself was designed to infringe copyright.
Agreed, I think technically, the software is only reproducing certain hardware (processors, etc.) which is legal. But you could probably convince a judge that since no software which runs on that hardware was public domain, emulating the hardware was an infringement issue.
Sortof like when they wanted to make it illegal to make and sell any device which allowed you to copy protected music CD's and then someone found out you could do this with a Sharpie marker - which might have made Sharpie's illegal . . .
Very true. I'm not sure it's legally pertinent, though, since the fact that MAME supports bootlegs MAY be simply due to the fact that it supports the original. I'm not familiar enough with the MAME code to comment on that. Unless the industry could show that the MAME devs deliberately supported a bootleg, this may be a nonissue, and even if it was, only in a suit against said MAME devs, rather than against Stanley MameUser.
Agreed, the bootlegs of PacMan infringe on Namco's (

) copyright, but MAME already supports PacMan, so Namco would be able to make the case there. Now if MAME supported only the bootlegs and not the original. . . ?
You're right, quite problematic. If the MAME devs did not have the actual ROMS as they were working on them, they would be susceptible to the same copyright infringement proceedings Stanley is. If they had them, but sold them afterwards, that could cloud things...so long as they don't NOW have a copy of the ROM without owning the original.
I think they buy (or borrow) the boards, dump the roms, and work from the dumps - I thought there was a clause that said it was legal to have the roms for educational or research purposes (such as developing a MAME driver). Am I wrong?
Probably true, but can it be proven in court? Very scary. If so: likely game over.
Hadn't thought of the legal ramifications of that one - Agreed, scary!!!