This is the best idea. Core2Duo with a HD7450 (w/ VGA-output) would be perfect for just about any arcade game, except maybe some modern ones. Get yourself a 20-24" Trinitron, build a cabinet, and you're all set.
I was talking about just buying a real arcade cabinet. You can find them in decent shape for like $400 - $500 possibly lower and you can do a little work. They make interfaces that plug directly into the JAMMA interface. In my KI2 cabinet I have a pi running MAME and it is all connected directly to my JAMMA harness and outputs natively. Old school games look fantastic on it.
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