That is a very strange problem. I see the basic effect you mentioned, but I also see that when displayed in Japanese, the categories list in different order. Is that supposed to be so? Is it Japanese alphabetical order, and to be expected?
I don't know anything about actually using multiple languages. I would expect that the Cat Dressing code would only check in the selected language folder for the existence of an image; since the category appears as text if there is no Japanese image, that appears to be working correctly.
The problem may be in the stylesheet. There is a standard stylesheet which sets background-images for selected categories in standard/hover/selected states; this will only use the original language folder.
You need a japanese_stylesheet.css file with different versions of these rules calling for the /japanese/buttons/ folder. (See /includes/templates/template_default/css/CSS_read_me.txt for more information.
I will work up an addition to the Cat Dressing readme to cover this situation, since it appears it will always be applicable when multiple languages and per-category background-images are in use.
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