I think a less accurate translation can sometimes result in a better product, but the translator needs to be very good to pull it off. The most notable example I can think of is Vagrant Story, which was widely praised for its localization.

Example from The GIA's review[0]:

"Lines as bland in the original Japanese as

"It is because you acknowledge things like freedom of belief. There can be only one God. This sort of incident occurs because you let heretics like them out of your control. That, and our parliament is impotent..."

become:

"All because of this religious freedom! Too much freedom, too many gods. Let those cultist cur-dogs run loose, and they will bite you. Gods! While our Parliament cowers...""

But if a bad writer tries this then you get Working Designs' localization style, where they "improved" the originals with unfunny 4th-wall-breaking jokes and references.

[0] https://web.archive.org/web/20010608201912/http://www.thegia...