It's not even about translating it. IIRC they have full permission from the creators of the fan translation to use their script and code to get it up and running.
Some people hypothesize that there are legal issues in areas of the game (such as the music) making it difficult, but that didn't stop them from releasing Earthbound...
Another common hypothesis is that they don't want to deal with backlash over some of the more odd choices in the game. Some people might take offense to the magypsies, thinking that they're somehow making a joke of trans or non-binary folks. Others might just lose their shit over there being folks like the magypsies in the game at all. And that's ignoring the mermaid air refill things making out with a child.
I love the game, but it's far from standard Nintendo fare in terms of tone and content.