When I download a fan translation, I expect the text to be in reasonably readable English, with typos and grammatical errors kept to a reasonable minimum. I'm not a huge stickler for accuracy. I do strongly dislike if translators inject personal agendas into scripts where they weren't present, but adding levity doesn't bother me particularly. (I do prefer that added levity remain in context to the world, though; pop culture references bad unless real world setting, etc.)
I think the "literal-liberal-Pizza Cats" debate as FAST6191 named it is a very interesting thing. In my opinion, there really isn't one single approach that's always correct; the appropriate localization method for any given work has to be chosen based on the quality of the original work, as well as a knowledge of the localization's target audience. The "Pizza Cats" style tends really only to work when you're translating something that has terrible writing but has artistic merit in other ways (beautiful art/graphics or music, amazing gameplay if it's a game, etc.) that make it worthwhile anyway. (Or, obviously, in anime's case, if you don't have access to the original script at all, as happened with the actual Pizza Cats.)
I like to use Final Fantasy V as an example because it's a game with three different English translations available, all of which use different approaches. RPGe's fan translation is reasonably literal and faithful to the original Japanese; this carries with it the possible downside, depending on your point of view, that it is also relatively dry (as FF5 has a pretty boring plot to begin with). The official translation seen in the PSX version, which is uncredited but generally believed to be an unedited draft produced by Ted Woolsey back in the 1990s IIRC, hews much closer to the pizza cats end of the scale, something that likely would have been toned down/cleaned up in editing had they bothered at the time; the obvious downside here is that the lack of editing results in some glaring errors like "Princess Salsa", although at the same time, for some people this results in a "so bad it's good" quality. Finally, you have the official retranslation seen in the GBA version, which is a kind of happy medium; it largely maintains the characterizations established by the PSX script (while heavily toning down Faris' pirate-speak, especially past the opening act of the game), and still includes a lot of added humor (including some fourth wall-breaking) that I suspect wasn't in the original, but from what I've seen is still widely regarded as very good.
I agree, in general, that there should be no sacred cows; willingness to discard them can in fact result in improvement on the original product sometimes. (Case in point: Kefka's characterization is completely different between the Japanese and English versions of FFVI; the English version of his character is the one that's become iconic, to the point that when he was featured in Dissidia, his characterization there was based on the English FFVI, even in Japanese Dissidia.)