Todd, I've been having some trouble with the approach that you suggested to me for my Theme I was making to override some of the default strings in the default locale.
I've had to copy more and more out of the default locale into my theme strings (what I was trying to avoid) in order to not have the default strings appear in my install.
I spent some time looking around for localization options for php and the results I've found left much to be desired. Made me start pining for a java port of vanilla.
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