From my knowledge of a few translator friends, they go with the feel and atmosphere, or the speaker. For example, if a businessman/manager or a politician was narrating the line, they might use less contractions. If the narrater was a young high school teenager, they'd use more. Course, there are exceptions, with characters having different personalities. A good translator would look at the original text and try to deduce the right "feel" from it, and go with that. Basically, what you said.Another thing about contractions is to try not to use them in a story's narration.
The ninja couldn't belive the size of the wall he had to climb. The other ninjas weren't joking when they said it's next to impossible to climb it.
OR
The ninja could not believe the size of the wall he had to climb. The other ninjas were not joking when they said it is next to impossible to climb.
Which line looks better?
About your last paragraph, this is sadly very common. A lot of current groups, especially in fansubs, refuse to translate certain words or phrases and simply leave a translator note about it, saying that they're difficult to translate to English properly. This not only distract the reader/viewer with so many TNs, but also makes the work less comprehensible, especially when you end up with so many Japanese terms that you'd need to memorise. A good translator would do their search in trying to find an equivalent term or a phrase in English instead of just slapping a note at the bottom.
Edited by Katsuri, 26 January 2012 - 04:59 PM.