We're arguing semantics but that's not what the difference between a translation and localization is.
http://en.wikipedia.org/wiki/Language_localisation
For example, writing color instead of colour is localization.
Writing "this guy are sick" is just bad TL.
An important semantic point that nobody should have to apologize for when making. (If there's
one discussion where this kind of nitpickery about word choice is a healthy thing, it's here.)
This 'localize' word seems to have gotten more popular in fields like computer software where making versions in other countries often means 'localizing' phone number formats, postal code formats, paper sizes, and the like. Localizing these things often also means translating into the major languages of those countries, but not always. So it feels like it's creeping into places where 'translation' has always been the correct word.
I'm a professional translator, and insist on that word, because I'm not a localizer: my work can be read and enjoyed by anyone who can read English no matter what their
locale may be. Translation is conversion from one language to another; usually the target readers are in different locales, but not always; localization is conversion from one location to another; usually this involves translating into another language, but not always.
Even as a translator, I wouldn't be so bothered by this word so much if it didn't serve as cover for things like regional restrictions and territorial lockouts: I once e-mailed a company somewhere about buying an English-language version of something, and their response was that since I lived in Japan, I had to buy the version that had been 'localized for Japan'. I don't want things that have been localized for my region; I want things that have been translated into a language that I speak!
Now, all of that being said, this game does contain a lot of US/British-specific pop culture references, and that part is closer to localization, but English, French, and German are all spoken in multiple countries and all over the world. The versions of the game in these languages are translations, first and foremost.
And I really do appreciate hearing about the defects in the otherwise-great English version. The Midgardsormr conversation certainly seems weaker in English. It could have been better, sure, but such examples are outnumbered by the huge amount of game text that is unquestionably better in English. I can't overstate just how amazing the English flavor is and how little people are missing if they play only it and not the Japanese "original". Even if Japanese is your first language and English your second, choose English if you only have time to experience the game in one language. Koji Fox's efforts are
that good.