Do you think it would be fun to add a "language barrier" between races in a game? It would add a level of challenge to the game I think.

I was thinking a programatically enforced language modifier (probably just a letter-swap) that different races would get different languages. Players speaking the same language would see what they say and others say in english, while players talking in a different language would show as more or less gibberish.

Players could gain skills in some sort to understand the language, and would get one or more letter replaced with the english equivalent with each skill (similar to FFX maybe?)
When the player becomes "fluent" in the language they could speak in either language either using a selector or a markup of some sort.

Using a markup would allow them to speak in more than one language in the same sentence, mixing words.

This would add no additional server strain. The text would be converted to the tongue, sent to the server, then the server would send it to the appropriate clients where ti is either converted to english or left alone.

Questions, comments, or snide remarks please.

Someone has to say it; "WoW does it!"

I think it adds something cool to a faction based game.

Sure it's cool. Unfortunately, you won't get a player-base big enough to have the luxury of isolating your members.