I agree. this is the way they do it in sweden. avery movie is in it's foreign language with swedish subtitles and I love it.
Except for children's movies. That used to annoy me when watching Disney movies, back in the pre-DVD era.
There was a game called The Last Express
which had a pretty nice way of handling foreign languages. Any character talking to you would speak English, but if they were talking among themselves they would speak their native tongue. If they were speaking a language you were supposed to understand (French, German and Russian, I think) their speech would be subtitled. Other languages were not.
There probably wasn't anything important said in any other languages. The game contained an enormous amount of irrelevant dialog, which greatly added to its atmosphere. Definitely one of the most ambitious and technically impressive adventure games I've ever played, though actually playing it was a bit of a chore. There was a lot of walking around, waiting for something to happen.