Well, here is food for thought: you might be correct that 1/6 of the internet population is a native English speaker. You can also consider that 8/10 of the internet population understands English. (interesting reading on the subject: http://www.cs.tut.fi/~jkorpela/lingua-franca.html
So whether you like it or not, English is considered the standard language of the internet. By using English you will appeal to the largest chunk of the population.
Now on to why we don't include localized templates. Where would this end? Consider this: we, as the crew, have to maintain the code and the templates. If we add just a couple of localized templates for the major languages we have to maintain them. I speak my languages fairly well, but there is no way I can maintain a Chinese or Spanish template. I hear you thinking: why not ask someone to do it for you? Yeah, great thinking there and certainly a possibility.
However, consider the time we need to approach each template maintainer, process the changes and update the template. Not to mention the time we probably need when a user contacts us with suggested translations for a template, which we also have to relay to the maintainer.
If we look at the language files, as they exists in version 1.7, I can only say that it needs to be revised. The code is old, chunky, not flexible and certainly not easy to add new languages. But more important: we maintain the languages, but since we as a dev team don't speak all the languages we have to ask people to update the translations.
All in all this took about two months to collect all the translated files. As far as I'm concerned this isn't working. So what are we going to do? Well, one thought I have about it is to ship Pixelpost only with the English language. What will happen to the other languages? Good question: this is going to be the responsibility of the community. The community will maintain and make language packs.
This also has to be done for templates. Because I for one (and I reckon I don't stand alone on this) have no interest in a couple of dozen templates which I don't use.
Also the remark you made earlier concerning the standard phrases in a template could be a real disaster template-wise. You need to have tags for every phrase, which have to be replaced by the core code, making the code slower and certainly does not make making a template easier (because of all the tags you have to use). The fact that you can use HTML combined with some tags to get the dynamic output is a great thing IMHO.
Let's see what Pixelpost is: "Pixelpost is an open-source, standards-compliant, multi-lingual, fully <strong>extensible</strong> photoblog application for the web." Note the "extensible"? That is what it is all about. We provide the basic infrastructure for you to build on. This infrastructure is suited for probably 40-50% of the users, the other users wants to extend the possibilities.
Ow, and we're not alone here, Wordpress does it, MoveableType does it, Typo3 does it, Joomla does it and the list goes on and on and on.
One more thing: we're in the process of rewriting all the core code to a more cleaner and leaner version (we call this version 2). Every release we make is a push towards the version 2 release with more code optimization, cleanup and better structure. But remember: this is NOT
our work, we do this for fun. (Yeah, hard to believe right?) So sometimes life just catches up on us and there are more important things to deal with.