Most modern video cards with TV out have the ability to output 480p over component. They will come with a little adapter to do this:

480p will be noticable sharper than 480i, and the colors will be more vibrant.
Arcade images running at 480p will look pretty good. It will nearly zero flickering. Some will be visible in windows, but during a good frontend or during a game it will be unnoticeable.
The downside to running at 480p is that most arcade games will not be able to run in native resolution. You can turn on some scaling and smoothing options to make the image look nice. I recommend advancemame2x and bilinear filtering. There are many other options out there though, and you should find what suits you.
Some modern arcade gamess run in 640x480. Soul Calibur is one awesome example. I think all Naomi games ran in 640x480.
If you have an old PC CRT monitor lying around you can try it out at 640x480. It will be very similar. The only difference is that the tv will have a softer look to it due to the coarser dot pitch.