I strongly doubt a fan translation of a game from 1997 is going to reflect on or tarnish -anything-. Fan translations are very common, and without them games would be forever unavailable to people who don't speak that language.
Kairosoft also produces English translations of many of its games. [2]. According to this photo from the article, the translation appears to be incomplete and leaves much of the text appearing as strings of question marks. [3] I don't believe that a company that produces dozens of games, including for current systems and many translated into English, would approve of an incomplete fan translation of one of its games.
[0] https://kairosoft.net/company/
[1] https://kairosoft.net/game/
And if doing things without an author's permission upsets you don't ever take a look at fanfiction.net.
It doesn't upset me. It's just that no one making fan fictions or fan translations should be surprised when they receive a cease and desist letter, DMCA takedown notice, or copyright infringement complaint.
edit: Actually, it does bother me that some of us think that it's perfectly okay to distribute fan translations of other people's work. It seems like when the work is a game or is in a language that few of us understand, like Japanese, respect for the rights of the creators goes out the window. This causes real problems for the creators, particularly individuals and small companies, that might want to enforce their rights, but don't have the budget or legal resources to do so. So, many of them are victims of international "fans" who do whatever they want. Here, there's no indication that the fans even tried to contact the company about doing a legitimate licensed translation; they just did whatever they wanted to without any regard for the rights of the creators.
In some visual novels, patches are distributed via delta patches that are designed to be used on the binaries provided by the original installation. Or in some other cases, the group only provides certain modified archives which are installed by overwriting the original installation.
In both cases, the end user who doesn't understand Japanese (or in some other VNs, Chinese) are able to play while the publisher/developer still gets compensated for their work.
But for things which you'll not be able to enjoy in a legal way, even if you want to spend the money? I'm all for piracy of software / books / music / art in that situation.
Fanfictions are legal, this one, not so much. At the very least, the redistribution the game part surely isn't.
If publishers aren’t quick to litigate fan fiction away, I’d say it’s because they decided that it’s actually beneficial to them. It keeps the community invested in the fictional universe, and the canonical works only gain in respect—and these are the only ones making money. So it’s a social contract between fan fiction authors and publishers. That is why fan fiction communities try to moderate submissions to keep their end of the bargain—i.e. no selling of fan fiction, and no fan fiction that could be seen as detrimental to the image of the work (for example erotica is not allowed in many places).
Related to this, the novel 50 shades of grey had a pretty interesting genesis where it started out as a twilight fan fiction, which was booted of fan fiction sites because of its explicit content. The author then created her own website. Because she gained a massive following, she realised that she could commercialise the novel. That’s when she changed all the names in the novel to no longer refer to Twilight characters. Because she had already transposed the characters to another universe, at that point there wasn’t much of Twilight left and she was free to market and sell it.
American version is like rights holder’s right to protect mostly financial interest, almost literally “copy-rights”.
When ones from different sides meet a misunderstanding like this happens; one side says “it’s not going to hurt your sales”, the other side says “how dare you mess with someone else’s binary” and the discussions go nowhere.
As for resolution, an emerging choice is to make the author monetize the pirated translation and let them take down the free version. Don’t work always as sometimes the rights holder consider that a negligible gain or minor loss with high reputation risks to day jobs.
So, “it’s not going to hurt sales” won’t work. “Do you have any idea to make it official” is probably better.