Yeah, that's undeniable. I think they might patch the game and add an font size option or something like that. 

I have no issues because I play it on a PC monitor, but I agree that it would probably be too small on a TV.

And yes, some letters look too washed out, here's a resized direct-feed screenshot:

where you have prouf if they will patch it? forum posts anything? The game was almost out for an entire year in japan and if anything i would imagine the japanese would have a harder time reading their own kanji text if it has the same size 

this is just regular button interface but reports, mission objectives and conversations are tiny

No, I haven't any proof. The word I was looking for was "should" not "might". Problems of being an Spanish speaker lol. 

It think it may have to do with localization more than anything. Because both examples are German, at least I think, I really don't have issues with the size of the font and my game is the American release. (Then again I play the game on a 60" TV)

And the issue here is legibility, not readability. Readability covers both legibility and the ability to comprehend the document. Because if you can identify most letter it is readable because you can usually identify what the word is suppose to be the surrounding text. Though extreme cases of illegibility lead to things not being readable. The "e" in this case does suffer from illegibility issues though you can tell by the shape it is suppose to be an "e" though a boost in size would defiantly help.

Sorry for the double post but I have to comment on this. This is may stem from an issue caused by the size of kanji. I'm not 100% sure but if the game was developed with a specified size for the font assets all localizations whould have to comply with this which causes some problems. In the past the size of user input was hindered because of this because so much more can be expressed with fewer spaces. But as I said I'm not 100% on this.

As for a patch it may be patchable by replacing the font with something more suitable for smaller characters. But stuff like that is up to Nintendo discression and they do patch things if there is enough out cry about it, I don't doubt something will be done about it.

I think it's the same size.

They should patch it because 32" TVs at over 2m distance is a standard setting.

I have a 50 inch Samsung plasma TV and at my normal sitting distance of 10.5 feet I have trouble reading the smaller text, but the dialogue text is fine. It is a task to read the smaller text, but I can "make it out".
When I switch to a chair that is only 6 feet away, I can read everything easily, even though the quality of the lettering is still poor in some cases, such as the letter "e". It is perfectly legible to me and I have no real complaints.
However, having said that, it would be nice if they put out a patch to improve the text.

i doubt that its more optimized for Japanese. Japanese text is more complicated and needs more pixels, it even needed more performance back in the day for old homecomputers. Espacially chinese chracters in japanese language should be even harder to read which the japanese language has plenty off.