I know some people don't like rewriting NPC dialogue, but honestly without a swath of footnotes to tell the player "Oh and this is apparently funny to the Japanese because cultural reasons" maintaining any kind of logical flow to the plot of a game would be rather difficult.
I'm okay with rewriting dialogue, so long as it's good dialogue. I know some people would like to be idealistic (read: naive) enough to think that language can have a 1:1 conversion but that's not how languages work. There's a lot of cultural idioms and quirks to master before you can really understand a language, otherwise we could use google translate for full localizations!