On a page like this, http://favstar.fm/users/asshuku, the Japanese kanji is being rendered like Chinese kanji. It's still readable, but it's just a little off-putting. I'm not native Japanese (I can read it, though), but the best example I can give of what this feels like for a Japanese person is that all of the text on the page has been highlighted and underlined. Readable, but annoying.
I was playing around with it in Firebug, and it looks like a simple(?) fix would be to change the line: <html lang="en" xmlns="http://www.w3.org/1999/xhtml xml:lang="en"> to: <html xmlns="http://www.w3.org/1999/xhtml xml:lang="en"> or: <html lang="ja" xmlns="http://www.w3.org/1999/xhtml xml:lang="ja">
You might also be interested in seeing Google's solution (http://www.google.com/search?q=google.co.jp), Slashdot's solution (http://www.slashdot.jp/), or Wikipedia's solution (http://www.wikipedia.ja/).