CVG just posted an interview with the team that brought us the Fatal Frame IV English patch. Here are some of the highlights -

on how faithful they made the translation:

Whenever I hear this asked, I cringe. The most 'straight' translation is a transliteration, but let me tell you, that's the worst kind. Some of the purists like to keep in the Japanese sentence endings or name suffixes, but that's either out of a misplaced love for parts of the culture they don't really understand or a laziness in trying to translate cultural speech patterns.

On the opposite side of that are the translators who give everyone weird southerner accents or strange catchphrases righto dont'cha know. A well done translation stays true to meaning and style while abandoning cultural semantics and accents in favour of proper representation of the characterisation and the script.

on keeping the setting in Japan:

The game has been very much tweaked for western audiences. Not tweaked in the sense of 'we made the main character white, changed the setting to the outskirts of Chicago, and made an arbitrary black person', but tweaked as in adjusting the language and presentation of the game to a proper western style. The disclaimer refers to the plot - it's set in Japan. We would no more change the Japanese references in the game than you would expect the zombies in Resident Evil 4 to speak English instead of Spanish. I want fans who read this to understand that nothing was changed outright - the original content is all there and no arbitrary content has been added.

on their next project:

Captain Rainbow has generated a lot of buzz, but I'm not quite sure why. I've taken a look at the game, and it's full of Japanese puns, Japanese-specific humour, Japanese characters never exposed to western audiences, Japanese parody and so forth. I'm looking at Tales Of Graces, though. There were already some enterprising souls unraveling it, but if Namco don't put out a release date soon, work will begin in earnest.