I've regularly used the Japanese Rakuten site to book hotels (and even the odd flight) with nothing but good experiences.

As to the differences in pricing between the Japanese and English sites, I actually sent an e-mail (in Japanese) inquiring about it at one point after some friends pointed it out to me: apparently, it is up to the hotel to input pricing and room descriptions, not Rakuten.

When the hotels initially choose to have their listings appear on the English site, they have to enter rates and descriptions in English. However, presumably because it is more difficult for them to find someone who can write the English info, this often never (or rarely) gets updated with promotional rates or newer prices.

Essentially, the discrepancy boils down to the language barrier, not discrimination or a deliberate attempt to overcharge foreigners. I've actually found Rakuten to be one of the more foreigner-friendly Japanese portals - even their e-greeting card service supports English (and, I believe, Chinese as well).