You understand correctly. The code, including the dialogue, is MIT, while the other assets are CC. OP could do their translation without asking permission, legally. It is our preference that people use what we have provided to create new projects rather than translations and the like, but we're not going to stop people doing things within the terms of the licenses.
For what it's worth, I've had bad experiences with translations in the past, so I'm not comfortable with them. But, I didn't want to use a restrictive license or stay closed-source just to prevent one type of project that I didn't think anyone would even want to do xP If someone really wants to do a translation and/or expansion despite our preferences against it, they can. We'll just have to hope they present their work in a way that makes it clear we weren't involved.