Thank you, Raz. We have fights--or at least, very *heated debate*--over these things, so it's glad to see some people like them ^^
It really IS hard deciding what needs to be left in Japanese. To be honest, I'm not entirely happy with translating "youkai" or "hanyou"--I feel that "demon" has too many Christian connotations. But, from what fansubs we'd seen, that tends to be the accepted terminology. If I were starting at the beginning of the series, there'd be a giant translation note and it would be probably not be translated from there on out. However, since it seemed that the fans were sort of divided--some knew the Japanese word, some didn't--we went with "demon" to be safe. And that's brought us a lot of flak but hey--at least we'll stay consistent with our predecessors.
But the reason we do translate a lot of things we do is that we firmly believe in making sense in English of as much of the episode as is reasonable. I think a lot of hard-core fans SERIOUSLY overestimate most people's ability to understand the Japanese terms, especially if they don't show up quite as often. I've seen people who greatly enjoy the series STILL have problems understanding "Youkai" and "hanyou" after 80+ episodes--simply because the word is so "foreign" it doesn't register as easily. And the audience isn't just English-speaking 20-something's either: there are middle-aged fans, very young fans, English-as-a-second-language fans...hell, I know a 78 year old woman who really enjoys Inuyasha! It's for those people that we try to translate things as best we can without resorting to a Japanese word every other second. As much as I'd love to use "miko", "youki", and every single name suffix on the planet, it's sometimes just unreasonable.
And honestly, it's not always appropriate to leave *everything* exactly the way it is. The "-sama" that Jaken affixes to Sesshoumaru's name, for example, refers to their relative social positions--in this case, a master/servant relationship. Personally I think that not referring to this at least occasionally ends up losing the very connotation you mean to preserve. -sama really doesn't mean batshit to the majority of English speakers, even with a translation note. You might have the translation note in the back of your head, but it's more immediate when you get a reminder like "Forgive me, master!" or "Forgive me, lord!" or the like.
That's just my stance though, and I know some people disagree with it. We do take recommendations into consideration, and sometimes things change a bit--we'll try to vary the naming a little more next time. Live and learn. But the hardest thing to do is pick something and stick with it...you can please some of the people some of the time, but not all of the people all of the time ^_~
Besides, the more Japanese words we leave in the more likely I'll see them abused in bad fanfic...and we wouldn't want that, would we? (j/k)