Jumping back to the topic, I doubt anyone else was thinking that someone chose the word "Midgar Zolom" just because it "sounds cooler to dumb yanks". As has been mentioned, the original localization team probably had very little resources for (or interest in) researching cultural references, were probably dumbstruck by the massive amounts of strange katakana, and in the end just chose something randomly. What I was talking about earlier was about replacing cultural references that made no sense to foreign audiences (like Moguri), but Norse mythology is well-established in the Western world (it is Western culture), so there's no reason not to preserve the reference.
Well Moguri was kept in the Spanish and Italian versions of localized games, but in any case by that logic Chocobo should have been changed to something like Chocoba in English seeing as it's (allegedly) taken from a Japanese snack called Chocoball. I don't think the English translators were aiming to change Moguri to better fit a western audience, surely they would have done the same for many other things? Or more to the point why didn't the Italian translators of FFIX call it "Talpistrello" or something similar?
* Localization is a very difficult task, of which translation is but one piece of the puzzle. Languages and cultures do not match 1:1, so clearly some hard choices need to be made where you have to prioritize what's most important to convey. Sometimes this can mean it's warranted to change even names and other seemingly "constant" terms, if it means the overall feeling is better preserved. (I stand by my personal opinion that Schala and Janus were good examples of this)
As I said before IOHO a lot of the "hard changes" in the original translation (let's call it the OT from now on

) seem to be rushed and / or poorly researched, and not changed because they fit the target market better.
* Seifer's goal is to do translation with minimal localization. Realizing this difference is important, as is realizing when other people already do as well.
As far as what we have done so far (mostly names) yes, this is absolutely true. As for the dialogue there is no way we can or even want to make it sound like the Japanese.
* The fact that FF7's translation contained mistakes does not invalidate all of it, nor does it invalidate the basic approach to localization.
Absolutely not, I mentioned this in my previous post; it does however mean that the OT should be pulled apart completely and purged of errors and inconsistencies. As you say below our approach is to ignore what has become canon, but I think our reasons for doing so were clear from the get go.
* Regardless of being originally correct or not, canon does matter. Buster swords, spoony bards, sons of submariners, when a term "sticks" then that will be what triggers nostalgia later on, not a "corrected" translation. Thus when doing away with canon, you will need to be very clear about it, and quite frankly be prepared for a lot of criticism. (It's like trying to claim Jesus had short hair)
What is your opinion on FFT and the PSP remake? Surely you wouldn't argue that the PS1 version had a superior translation because it came first and established "canon"? I haven't met anyone who thinks so (although the PSP "olde speake" is a little OTT at times), why should FFVII not be subject to the same process?
I'm going to go out on a limb and guess that most of the criticism that Seifer's project receives is not so much because of the changes they make, but because of the attitude with which it is presented; that there is one true translation and that they're the ones doing it, and if you prefer a different translation, then you're wrong (and possibly stupid). Also, claims like "your hands are tied" and "you are only following the Japanese original" make you sound less like a competent translator and more like a self-proclaimed prophet doing the work of God. In other words, the kind of fanaticism you sometimes accuse your critics of.
The reasons for following the Japanese as close as possible is we have no contact with the original creators; every decent translation ever made is, I think, done with constant consultation and / or supervision from the original author(s), we don't have this luxury. If Nomura could tell us that a lot of the creature names were thought up under the influence of a particularly bad acid trip we'd be delighted.