Views exposed filters for taxonomy hit the database directly to load taxonomy terms, or else use taxonomy_get_tree() which also hits the database directly. Either way, the entity system gets bypassed.
This is no good for translation, particularly if using the Title module, as it means the translation system has no ability to get in and do its thing. The only fix, unfortunately, is to do actual entity loads. That does, however, allow the Title module and similar modules to futz with the term name before it gets displayed, doing things like translating it for the user's language.
Patch coming as soon as I have a nid.