I don't fully agree, or at least not in the context of highly specific / subculture translation tasks.
As an example, let's take FF12 and Persona 4.
The former is, in many ways, quite similar to a classic (western) high-fantasy tale. Princesses, political intrigue, ancient artifacts, a Renaissance-inspired society. Going with a full-on non-literal localization here makes perfect sense and led to a fantastic outcome.
The latter, however, is a story about Japanese highschoolers doing very Japanese highschooler things in a small Japanese town. You are never feasibly going to localize that setting (you'd have to develop an entirely different game). So, to me, attempts at "over-localization" of just the dialogue, in this specific context, make no sense. I'd argue that they tried that in Persona 2 (with a similar setting) and it was worse off for it.
That is not to say that I enjoy listening to American VAs using Japanese honorifics in English speech in a case like that; but honestly, personally I don't believe in dubbing for this kind of content at all.
To put it more succinctly, I think people rarely put enough emphasis on the type and specificity of the content that is being localized when they talk about the merits of more or less literal translation.