swpath is for loose files only. If this path is set through the GUI then it works fine - I know because of the extensive software testing I've been doing over the last few months.
MAME can only do the first path in swpath, but MAMEUI can handle multiple paths. Note that the path separator is semi-colon, not comma.
For softlist-list-based-software, that path goes into your rompath, along with the path to your bios roms and so on.
I've never had any crashes because of the setting of swpath, right or wrong.