No, you haven't done anything wrong.
The "most logical" 4-way joystick semantics you request are already implemented in MAME, but only for games whose inputs are configured that way. If you scan the -listxml output carefully for the tags describing joystick controls, you may be able to see the number of ways they have been configured with.
I've put in a request to change the Ghouls'n Ghosts joysticks to 4-way, as well as those in all the Pang games except Mighty! Pang (whose flyer, unlike those of previous games, does specify an 8-way joystick).
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