Maybe SOE should consult a real localization expert instead of going for the cheapest agency around.
I'm a game localization expert who has been working full-time in the translation industry for more than 11 years. During my career, I have translated about 18.000.000 words (which roughly translates to 57.200 pages).
I haven't played the German version of the game, neither do I speak German. But the problems that seem to be plagueing this game are very typical.
First, it seems that the translators of this game are not making (efficient) use of so-called Computer-Assisted Translation (CAT) tools. These are tools that remember every string that has ever been translated, ensuring consistency throughout the text. For you, the gamers, that means that item A is not suddenly called item B in the next update. Usage of these tools is a must, as no human translator will be able to remember how he translated item #18763 5 months ago.
Second, it seems that the game has not been fully localized. It goes without saying that if item A is translated once, it should be translated everywhere. This issue can either be caused by SOE themselves (not providing the agency all translateable strings) or the agency they are using (they have used wrong filters for filtering out translateables or they have simply overlooked certain strings). Another possible cause is that the agency receives the translateables after the update has been implemented, or that the agency is simply running behind the facts because they can't keep up with the speed the game is updated.
Third, it seems the agency is using different translators at the same time, to make sure they can cope with the deadlines that are undoubtedly being imposed. Some of these translators seem to know their stuff better than others, as no sane game translator would ever translate Sage as a spice. It's possible the CAT tool databases of the different translators are not linked to eachother (to my knowledge, not one game translation agency in the world actually uses CAT tools, let alone linking different databases from different translators - this while CAT tools are a must for these kind of projects). Having the same game translated by multiple translators without using CAT tools is a safe way to ensure that you'll get at least 36 different translation styles with 36 different translations for every term.
Fourth, it seems the updates are not play-tested, or that SOE does not impose a maximum string limit for each string. This is causing the truncations on your screen. Play-testing costs extra money, so often developers just forget about it, resulting in a total mess. One way to prevent truncations while not play-testing is by linking maximum string limits to each string, that should never be exceeded by the translators. The main cause of this is however that the devs have hardcoded the interface, instead of making an interface that adapts itself on the fly. This is a major design flaw seen from a localization perspective.
Fifth, it seems that the translators did not take into account the context of certain translations. When translating lists that are clearly in a certain order (for example, the English strings start with the recipe numbers), the same order should be maintained in the target language (i.e. you start the German translation with the same numbers).
That's just a few things that could have happened here. For a project as huge as this, things will need to be handled very structurally, and it seems this has not been done. What you then end up with is a card house that will collapse sooner or later. This isn't the first time, and it won't be the last time. The industry I work in is infested with false prophets and we definitely deserve the terrible reputation we have.
Developers should learn to use agencies/freelancers that/who know what they are doing, instead of going to the agency which promises the quickest delivery date for the lowest price (which 90% of the agencies do). Game translations done by "professional" agencies are mostly handled by totally inexperienced project managers with several weeks of experience, who move on after a year or two once they have found a company that actually pays a reasonable wage. Most project managers have no clue about the inner workings of CAT tools or the structural approaches needed to tackle long-term projects, and most MMORPGs are play-tested by international exchange students who know everything about biotechnology, but have never touched a computer game in their lifes.
As you noted yourself, Square has far more experience in the localization field and it shows. They hire only the best of the best and are willing to pay for that.
Reading your comments it seems that things have become so bad, that a total retranslation from scratch is necessary. Managing the translation process is a science on itself, which is unfortunately far too often underestimated.
I'm willing to give SOE some professional advice on these matters if needed, as I have barely scratched the surface of this issue. SOE knows where to reach me. And I've got quite some credentials to show them 
Message Edited by Yomarbalthasar on 08-31-2006 08:52 PM