What it comes down to is it's completely illegal.
Somebody who owned the copyright though would have to prosecute you, and in general it's not worth it to them. They MAY send you a letter threatening you with a lawsuit, but probably not unless you were pretty public about it.
Lots of gray areas and of course there's the moral issue people bring up where they're only making it for their machine, blah blah blah but when it comes down to it, if you go to court on it, you're going to LOSE.
Lets hope that doesn't happen with the big guys, it would hurt us that need the art.
The big guys that watch out for counterfeit are Disney, Tommy Hilfiger (used to, who knows now?), Namco, Nintendo will put you in prison over the shit. Nintendo doesn't say anything about their Arcade Art, though, so no big deal. Williams and Gottlieb are very protective of their pinball stuff because they've sold the license rights (temporarily).