From what I undersstand, Might & Magic was more popular in the United States as far as computer RPG's were concerned. Better marketing I think. I remember seeing full page ads for various Might & Magic games in most computer gaming magazines, and even ads in console mags for the various ports. Wizardry seems to have been playing second fiddle to M&M here. I know I was more enthralled in the story of Wizardry mystelf, even before I played the game, piecing it together from the reviews and ads and such.
Up until Final Fantasy VII, and thanks to the massive marketing campaign Sony/Square Enix put behind that release, RPG's finally started being taken seriously in North America. They were decently popular here but they never really "took off". Probably the most popular game even near this genre leading up to FF7 release was Zelda and that is as much an RPG as Sonic 1 is a platform game that requires you take your time to navigate the levels.
From what I have read/researched over the years, it is not so much the actual translation that is the problem with fan translations. It is where the text is stored in memory and how much memory it takes.
Kanji, and many Japanese RPG's in general, have a different setup for text (it is not a one to one conversion with language or memory allocation). I think English letters take up more space causing problems when injected back into the code (depending on how the game was coded in the first place).
I don't know the exact details but I remember those details coming up often when those that do have the skills have talked about doing a fan translation.
We have had live camera language translation for years, my first experience being with Windows Phones. I even tried it with a few Japanese games. Other than the slightly slow response (a second to three or more depending on how much is being translated and graphics involved) did not make it ideal for playing a game like Wizardry but for something with light language barriers (menu translation for instance) it would work great.