I'm a freelancer translator, I just translate manga, so I don't have any experience in game localization unfortunately, but allow me to lay down some of my opinions on this subject.
Changes aren't necessarily a bad thing, but you need to have a good reason to change things. I try to maintain accuracy, but I put a great focus into natural sounding translations too, so I'm not shy about changing something a bit in order to sound more natural in English. So I don't think changing "I'm going home." to "I gotta jet." is sacrilege, and I think most reasonable people wouldn't believe so either.
What pisses people off more are censorship and name changes. I'm definitely not one for censorship and I never agree with it. Fortunately I've never had to censor anything in my work. But yeah, censoring something because it may offend someone? Fuck off with that shit.
Name changes are another thing that ticks off some people. I don't like unnecessary changes either, though some are fine. Take Shin Megami Tensei for example. Some demons have a different name in Japanese than they do in the culture they originated in, like Hua Po, who is Kahaku in Japan. I think changing names to match their origin name is just fine. Changing character/item/ability names and such, well, sometimes it's fine. You have to take the author's intent into those. A name that sounds cool in Japanese might not sound so cool in English. Or say, a name based on an the Japanese pronunciation of an English word that makes since to Nips but not to English speakers. Do you keep the original name anyway? Or do you perhaps ask yourself what name you'd come up with if you based it off the English pronunciation of that word so English readers immediately understand it like the Japanese readers were meant to?
I'm rambling. Basically, I think a good localization will try to maintain accuracy as best as possible, while changing what must be changed in order to make things more natural in the target language.
As for changing characterization, I don't really like that. I've never done it myself, because they're not my characters, my job is just to translate someone else's work, not change the things I don't like.
Additionally, I don't think trying to punch up dialogue a bit is a bad thing. Japanese dialogue can be very stale indeed, and I think giving it a bit of flavor so long as you don't go too far is a bad thing. Of course, some translators/localizers punch things up too much and wreck the tone, character, or even the dialogue, so it must be done with great care.
Like I mentioned, I've never done video game localization, but I've heard about the experience of some. Sometimes they get a shitload of material, like the guy who localized MGS 1 got a bunch of material to make his job easier. He got a bunch of note books I think and other things. The woman who worked on MGS2 basically got a huge game script and nothing else. That would never be good, because you just won't get the context you sometimes need in script form (then again, much of MGS2's dialogue took place in coded scenes, so it wouldn't have made much of a difference anyway).