A few random factoids:
In "Icarus Factor", our heroes are impressed by the fact that an officer speaks several languages. Is this because he
a) practices a useless art with commendable devotion?
b) is considered a valuable asset in case the UT breaks down?
c) like other Starfleet people is required to speak foreign languages, but breaks all records by his command of more than 40?
In "Basics", Neelix can converse with Janeway despite the absence of commbadges. Newly encountered locals cannot. Probably support for the theory that all Feds have implanted UTs in addition to the badges, and can speak and listen to known languages through the implants but cannot learn new languages without the help of the processors in the badges.
An implanted UT could intercept language at various points of the deciphering process. It wouldn't merely pick up sounds and replace those with others - it would pick brain input and translate it. Reading Cardassian would not be any more difficult than listening to Cardassian, then. Probably the implants would massively assist in reading the nonsensical-looking Federation interfaces, too.
If Feds have UT implants, this may mean that Picard doesn't know any English, and instead always communicates in French which then gets translated. The corollary to this might be that if people are implanted at early enough an age, nobody ever learns any language save for one's personally invented one. If the implants broke down, everybody would observe everybody else speaking in unintelligible grunts.
Timo Saloniemi