It could certainly work. I've had cabinets running off PC's, so there's no reason why you couldn't do something similar with Pandora via TV-out and some USB based arcade controls. You just have to wait for Pandora to actually come out and MAME to be ported (won't take too long I bet).
Would be hilarious to see that tiny little Pandora "powering" a big MAME cabinet.
Just keep in mind - MAME needs tremendous resources compared to some other emulators, so you won't be able to run every MAME game on the Pandy. Certainly most 3D games are out. But for most 2D 80's and many early 90's arcade games, it should be alright. Of course there will be other faster arcade emus for Pandy too I'm sure (for NeoGeo, CPS2 etc.).
If you do it, please post some photos. That would be fun to see!