After updating Magento from 1.6.1 up to 1.8.1 I had to state that the names of the categories aren’t translated once again, using the language switcher. I got always the ugly 404 error back while changing the store view. The fix was to install a free extension, especially made to fix this for Magento 1.8.0, written by Vinai Kopp, working for Magento 1.8.1 too.
I have installed modman too to get a clean base and the language switcher is now working fine 😉
This extension fixes a couple of bugs in the core/url_rewrite_requestmodel which are triggered when you are using different url_keys per store for products and categories