Hmm, I thought there was something in Paula that did it. It's been a long time since I looked at this stuff 
Assuming there is no hardware MFM, then even better. One less thing to worry about on the device end. You've got a DMA driven serial port that should be able to shift data at a high enough bitrate for a lot of mp3s...
Without meaning to disparage the old lady (25years isn't old!!!), she was a simple little beast... but that is why she was so flexible... I think the amiga could even read the weird Mac disk encoding schemes, with the right software... Näturlich...