Maybe it's a port of the Arcade, but it's definitely not the Genesis version. The little system could not handle scaling. Also, when you killed bad guys in the Arcade, they'd yell "Oh God!" On the Genesis, they'd just scream.
The difficulty is another giveaway that it's the arcade version, lol.
The 40+ mins of discussion are in the accompanying podcast.
It very much takes place in space. Not sure if there are "space" battles, but you are definitely not on Earth.
Split screen was confirmed, but not shown
"but at least that has a better story than Heavy Rain."
An Alien Invasion with grunts trying to ensure mankind's survival is a better story?
Good luck. Stay away from spoilers and prepare for another emotional experience :)