Mugen has no public source. OpenMugen does and this was ported to the PSP but OpenMugen is NOT complete, it is still in the beginning stages.
Mugen and Open Mugen are TWO seperate projects http://en.wikipedia.org/wiki/M.U.G.E.N
As far as decompiling Mugen is concerned, I have no clue on the legal issues as it would depend on the the TOS, Copyright and license agreement but all the decompiled code you would get will be in x386 assembly and the PSP is a MIPs processor. Translating a program as large as Mugen from x386 assembly to anything the PSP can use is an [near] impossible task.
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