To be clear, I believe Billy's video shows MAME gameplay. I don't believe the hypothesis given by the expert witness. But it's not a "debunking" to just say that this is an unlikely explanation. You have to find arcade cabinets that are malfunctioning due to degrading components and show that even in the worst case they don't look like MAME gameplay. As far as I know, no one has done this, they have only compared Billy's video to arcade cabinets in good condition.
The chances they would just so happen to look exactly how a particular emulator wrongly displays them, and do so over and over, is virtually zero.
TL;DR MAME would have to emulate a CRT's electron beam drawing in the original cabinet's direction if it wanted to be spatiotemporally identical. The notion that a cabinet could glitch out and accidentally perfectly emulate MAME beggars belief.
Like you said, I suppose it could happen, in the sense that it wouldn't violate the known laws of physics.
But it didn't.