Oh, this is an infringement, no doubt. However, very much like Lucas, Nintendo's actually pretty good at allowing its fanbase a relatively large amount of leniency when it comes to works of passion, such as fan films or game knock-offs, as long as they're not directly taking money away from them. They could very, very easily have pressured the Mother 3 Fan Translation Project to pull their fan translation as it became quite well known (even had a blurb in Gamepro) and really punished them for selling Mother 3 merchandise, such as the guide book I picked up. But since they have absolutely zero intention of ever releasing that game here, they let it go.
I was there on that fateful day, were you?