Arcade and emulated play have different verification standards. Generally you need to reset the cabinet, which shows the machine's uninitialized memory on screen, post game you need to show the board. For emulated play you typically need to provide a full recording of the game, which can be re-run in the emulator.
One difference between arcade and emulation comes down to inputs. The arcade joystick has a 4-way restrictor. When Jumpman is climbing a ladder the player can't provide left/right inputs. At a high level this impacts their ability to steer and group barrels. This is totally irrelevant apart from the highest levels of play.
If such a pattern only shows up in 1/4 of the runs and you need a good combination of three or more such patterns over the course of the game, the ability to control this will make reaching a world record much much easier. You still need a lot of skill, though.
There are some excellent documentaries on speedrunning on YT: For example Ninja Gaiden https://www.youtube.com/watch?v=7u1tVD7UEqw
And it's also possible to put some visual or aural indicators for player when to press which buttons, so the player would be just following computer's instructions. An ability to sync your actions to background music not provided by the game itself is also a possible avenue for cheating.
So the idea that somebody can set a recognisible world record while streaming from home is ridiculous. A proper procedure must involve all hardware and software provided by competition organizers and checked by independent judges.
It might be easier to do certain things with different hardware setups.
An illustrating example: If you play quake 3 at 125 fps you can jump farther than you could if the game was running at 60fps.
In fact TG has a separate leader board to track the mame high scores. Which is one of the most frustrating things about this whole affair... if Billy really wanted to use mame he could have just submitted his score under the mame category instead of lying and submitting it under the arcade hardware category!
1) It's much easier to cheat (in many ways, adjust random generators to always be in your favour for example).
2) There can be differences (the differences are how he has been caught) -- it's common that games in emulators are faster as they don't bother implementing waits of various kinds correctly, as most games still work fine (often better, as they'll skip less frames), and it would just make your emulator slower.