A "-singlemouse" like option might simplify a lot of the problems people are getting, but when derrick said more options is not something mame wants to do ATM... [shrug]
IMO, having system mouse usable at the same time along with the multiple individual mice is not workable in official mame; it would have to be either/or. Even "just" adding a -singlemouse option would have problems with cfg files setup for mouse 2-8 that would need to be handled, or you'll have more complicated questions asked. Will -singlemouse wipe a multiple mouse cfg when run for that game, or will mame have to convert mouse 2-8 to the singlemouse. Then what happens when you remap inputs in game?
Hmm, I guess it's possible to ignore the system mouse when remapping, and use the -singlemouse option to determine if it should use the numbered mouse (ie multiple mice) or the sysmouse (ie single mouse), but that would either use more variables and the code to handle them, or some (not nessary noticable) slow down. All OSD code OTTOMH. Not exactly official mame feature level, though.