the point was though that if the community was against the violence they did not have to let their kids go into said arcade either. Back then most arcade machines were in arcades, or game rooms, sure they had them spread out pretty much in every laundromat and 7/11 also, but those were usually Donkey Kong or Pac-Man machines.
All I know is in every town I was in, grew up in KS so it could have been different elsewhere, they did turn the blood off. It wasn't just the arcade operators choice, often is was his responsibility, I knew one arcade before MK came out that had Street Fighter II in it and a lot of kids parents would not let their kids goto that arcade as long as that machines was playable. Responsibly parents only had to mention to the vendor they would not allow their children in their establishment with such games in play. And where I lived they did this a lot.
The difference is in the options, in the arcade it made sense to have the *option* to turn the violence on or off, the home versions that had violence often had the same option to turn said violence off. The ones that didn't should have been censored because back then we didn't have a industry standard ratings system, MK launched that remember.