I've just double checked their site, and it does also say 98SE and ME, but 2K and XP are preferred.
I've just given it a go, and it's not bad. There are still far too many 2D based windows and pop ups in it, so you never really lose the feeling that you're running Windows.
I created a short cut in it for MAME, and running it just throws up the standard MAME window, so no fancy effects or anything like that

It's also pretty difficult to navigate and get around just using the sticks and buttons on my control panel. You really to have 2 sticks and a selection of buttons (or a keyboard and mouse). You are also quite limited in the keys you can remap, as several of them are used for functions within the software (but this is fairly understandable, as it is designed for general Windows use rather than dedicated MAME use).
So an interesting thing to play with for 5 mins, but I can't see that many people seriously sticking with it for prolonged periods of time (not until it advances a bit more anyway).