I like the idea of our using the web-site translation idea for the next windows release in a new region- can you imagine the slashdot posts on that
Seriously though, the issues in internationalization are really complicated and subtle for large applications targetting many regions. Windows is kind of an extreme case and it took us a while to get the process working smoothly ( and it's surprisingly efficient now... )..
Certainly resource files are part of the picture.... here we tend to use textual resource files that can be handed off to localization people to translate. These are then integrated into the binaries through the build process etc.