Oooof, there's a LOT of information to wade through over there! I seem to recall having a RaspPi 3 with an old version of RetroPie... Perhaps it's still around, hiding in a basement box somewhere. And, WOW, I see what you mean - they don't appear to be as cost-effective these days!
With the mention of standard xbox controller, now wondering now if a couple daisy-chained x-input controller boards can be directly connected to a Pi for an arcade setup. Not really sure how it all works, but sounds possible.
Coinops Legends 3? "Includes 630 curated MAME titles and 55 console games"? This seems like something worth following up on!
To your comment on the USB stick - I also ran into that problem when I was trying to mirror my Windows installation to the Atari VCS. Up until that point, I wasn't aware there were substantial speed differences... but my decade-old drive wasn't up to snuff, so I feel your pain!