We use this module together with Page title module. In page title module we use the [term-title-raw] token to set the page title of term pages. We also have i18n to have all terms and titles translated.
When a term title is defined, the translated string is returned correctly.
When no term title is defined, it returns the untranslated term name. I think the problem is at function taxonomy_title_token_values().
A check is made to see if a title is defined and if not the $category->name is returned untranslated.
$values['term-title-raw'] = ($title) ? $title : $category->name;
I'm not sure this is the place to translate the term name, but with a quick test we made, everything worked perfectly. We replaced the above line with:
$values['term-title-raw'] = ($title) ? $title : i18nstrings("taxonomy:term:$category->tid:name", $category->name);
I'm not creating a patch, because as I said, I'm not sure that this is the way to go.