Yes, the inline translation feature is broken in Google Chrome. Back when the inline translation feature was originally developed, Magento made use of a non-standard translate
attribute in DOM elements to flag translatable text.
Since then, Google Chrome has a feature where a default translate
property is added to every DOM node available in javascript (over simplification).
This, in turn, interfers with Magento's PrototypeJS xpath code used to implement the translation feature. Specifically, this
if (!$(target).match('*[translate]')) {
target = target.up('*[translate]');
}
I solution I came up with last year was to add the following bit of javascript to every page when inline translations are active.
if(Object.__defineGetter__)
{
var hasTranslateAttribute = function(){
return $(this).hasAttribute("translate");
};
document.observe("dom:loaded", function() {
$$('*').each(function(theElement){
theElement.__defineGetter__("translate", hasTranslateAttribute);
});
});
}