I think it could work. But you should probably try to stay true to the simplicity of those games. Don’t make it too complicated with too much of a “twist”. I would attempt it with no scrolling but I could be wrong. Maybe scrolling would be okay. I would definitely stay away from 3D playfields and any camera rotations. If you want to model your hero in 3D or even make the whole level 3D that can be fine. Just keep the player movement on a single plane.
I would not worry about competing with mame. Just make a good game that appeals to the casual gamer and they will buy it. They are not going to be comparing it mame games. Besides, it is easy to beat a mame game. Those arcade games all have a design that is all wrong for a PC game. They all try to get another quarter every 3 minutes. When you can play Gauntlet with infinite lives it is not fun anymore.
That reminds me, you will need to be careful to not copy the design of an arcade game too closely. The player psychology and reward schedule need to be very different than a quarter drop game. Players are not going to want to reply the same level over and over until they learn it perfectly. And if they die 3 times on level 4 they are not going to stand for going back to level 1. If you allow save games and/or infinite lives and/or level check points it is going to affect how the levels should be designed and how many you need. Basically, it boils down to the fact that you will probably need dozens (or hundreds) of levels.