I can see both sides here.
On the one hand, vast numbers of works are just unavailable outside of Japan, in any readily accessible form. Likely most of these will never be translated at all, so a fan translation can’t hurt the average title. Especially fan translating games from dead companies should be a close to harmless activity.
On the other hand, a particular game that has already had an unofficial patch available for an extendend length of time, is probably not terribly interesting as a legit translation. Since the patch isn’t sold with a legit copy, but rather released over the internet, realistically, most copies of the patch will be used with pirate copies of the game.
And if the patch has been available for a long time, most people who’d be interested in that title will have heard of the patch. So much of the demand for the title will have been sated by the patched game. Sure, some people will buy the game just to support the market, but most people who played the patched version are going to be a hard sell for the legit version.
If you’re ever going to be releasing your game abroad, then, you have to keep your market from being cannibalized before you get a crack at it. Otherwise, your game is much like a re-release before it’s even out the door.