The point is, a good guy named "Sinestro?" That's just such a goofy, over-the-top comic-book villain name that it's hard enough to take seriously when applied to a villain, let alone to a hero. Audiences who come into this with no knowledge of the mythos are going to go, "Why the hell did they give this heroic character a blatant bad-guy name like 'Sinestro'?"
Personally, I would play off that aspect. Universal translators can parse out general speech, but proper names are always going to be a tough nut for a translator to crack. Is the guy's name really Sinestro, or is that just what it sounds like to Hal (and by extension us)?
Also, let's not forget that Sinestro is just a surname; the character's full name is Thaal Sinestro. They could always pull a "Batman Begins" and just call him Thaal for most of the first movie. The villainous name could be saved for the end of the first movie (after we've seen some development of Sinestro), and that would then help finish the set up for the sequel where Sinestro shows his true color.