It's fairly playable without knowing Japanese if the story doesn't matter much to you. And it's still dead scary regardless. Dementium failed to scare me, but this one succeeded.
I agree that this game should be localized. There's always a chance later on though. If I recall correctly, it took them quite a while to announce a localization of It's a Wonderful World (The World Ends With You). We'll see. I think there'd be a pretty decent market for a game like this in the US.