The ARM does floppy & hdd I/O asfair. The rest of the capacity should be free. The communication with the FPGA is through a few I/O lines I guess. So they could cooperate, but I wouldn't place any realtime soundprocessing etc.. in the ARM. Btw, the ARM can tell the FPGA what to do with it's I/O lines. If the FPGA is configured that way.
An efficient option might be to use MAME as usual. But code for software hooks for chips that are too hard emulate properly in software. And thus avoid unessary (re)coding for functionality that will work just fine in software.
