The playlist viewer shows filenames, not song tags, that's why you see the 4 letter names. What you call "translation" is really only the reading of the metadata of the audio file, something that's done independently of the file coming from iTunes or not. For iTunes files without metadata, their 4-letter filename will be shown (like with "normal" files when they have no metadata, their filename is shown as the title and folder as the album).
Decoding each file's metadata for showing in the playlist viewer every time you access it would be very slow (speed which would decrease when the playlist size increases), and I think the only other way to show song titles/artist/album in the playlist browser would be to tie it closely with the Database feature, which would then lead to other problems: not all users have the Database initialized; even the Database can be slow with many files; and some serious Database bugs could also break the playlist viewer.
In conclusion, I think it's much better to have a KISS playlist viewer which only shows filenames, and a separate Database feature which decodes and indexes metadata tags. You can use the Database for creating playlists while seeing the file's metadata, but there's no way you can see file's metadata instead of the file name in the playlist viewer.
If you plan on using just Rockbox on your iPod and forgetting the original firmware, you can simply forget iTunes and its proprietary database format, and use another music syncing software, which will sync the files to the iPod with proper filenames (unless your files didn't have proper filenames since the beginning...), making it much easier to deal with your music and playlists inside Rockbox.