Much to my joy, I came in contact with a fellow by the name of Undamned who actually owns the physical machine. Undamned managed to purchase the machine when it went up for sale at Yahoo Auctions Japan some time ago, and it now sits comfortably at his home amidst a sea of video game memorabilia.
Having played the game first-hand, Undamned wrote up his experience and history with the machine over at his blog, Undamned's Musings.
"The ultimate goal of the game is simple enough: get as many points as possible in order to win a prize. Points are made by hitting either the target hanging below Dr. Wily's UFO or the cards behind him. The rear cards are worth 100 points each, while Wily's UFO target is worth 1000 points. The UFO moves back and forth across the play field, so you can't just keep hitting the same angled shot over and over to rack up those 1000 pointers."
The post pretty much details everything there is to know about Panic Shot!; the mystery of the machine is no more.
Seriously, do check out that post. It's highly informative and guaranteed to make you long for your own Panic Shot unit.
Source: Undamned's Musings