(Consolidating my replies here~)
OBS is by far more popular, technically better but... Our previous computer didn't work right with it, which is why we got into Xsplit. Xsplit kinda sucks in some ways but it's serviceable. Fortunately, the two program are similar enough and share enough of the same toolset that if something works for one, it'll probably work for the other.
Ah Swedish huh! Neat~ We have a couple of Swedes in our audience too.
Oh that's interesting, so you do use chroma keying already! I definitely think it's best to use the lower-power method since a utility program like yours should definitely not make too much of a footprint.
1. Yes, basically!
2 - 4. Excellent~
It's certainly functional as it is, I got the blackness problem to mostly settle down. Ran another test and I think it's that...if I click the GameTranslate overlay that pops up over the game, then Xsplit thinks what I clicked is the 'active window' it should capture over the game window. (As I use an 'auto-detect' setting for capturing games.) Basically, Xsplit thinks the GameTranslate overlay is a 'game' if I click on it. If I avoid accidentally clicking any overlay elements this shouldn't be a problem though.
As for your 0,0,0 blackness I figured! I basically...well, here's a pic of that settings menu I configured for chrome keying the overlay right. If I chroma too little blackness, it just covers the whole game window. If I increase it too far though, that's what causes it to eat into the lettering and the text window and look bad. These are the settings I found to work best.

As for the Manual vs Automatic... I didn't really 'understand' Automatic. I initially used it but it didn't...well, literally seem to be doing anything with the games I hooked it to? TBH I sort of gave up tinkering with it very early on, set it to Manual, set my tilde key to be the Fast Key, and just press tilde to start a selection, drag it across the text I want to translate, and let go. Besides...if Automatic is (supposed to, at least) capture the whole screen...that may be messy. If I try to capture a lot of text with the Fast Key drag, like the whole screen in a complicated inventory, the text sort of jumbles up. So I think it's better to capture sections at a time anyways.
I would like to know...how to make Automatic...work, though. I didn't actually get it to do a thing for me, so I can't comment on if it would be useful to me or not.
EDIT: Oh, I see. I tried again and got Automatic mode to work. I didn't realize you also had to still MANUALLY select a capture area while Automatic mode was on and then the model got to work automatically. ...That said, I don't like it very much for a common habit it seems to do that this gif shows...

I think a controlled manual capture is better in most cases. Less-intensive too, I'm sure, than the translation tool running across the whole screen all the time.
And yeah, if there's text all over the screen GameTranslate can...be very messy about displaying it, which basically makes a full screen auto-translate sort of a jumble. In both Manual and Automatic modes. Here...

This is a shop screen: Untranslated, Automatic, and then Manual, respectively. Either type of translation of this screen is quite messy when I try to capture the whole screen's text. Manual's layout is worse than Automatic's, but of course Automatic here was also still flickering the translation to different variations too. All sort of a mess, regardless of what I pick for a screen-wide catch-all capture area.
So yeah, Manual with capturing sections at a time feels better...for right now, anyways. Surprised to hear it's been neglected; it actually feels the best right now, so I would ask that you don't leave it behind too much in the future. :)