Actually I'm would not go as far as to say that tipping in JP is considered an insult; not any more anyway. In the years of travelling in JP we've noticed a gradual change.
In fact, a lady butler at StR Osaka hung around after showing us the room. We guessed she was expecting a tip, though we may have been wrong.
We tip for exceptional service, and it has almost never been refused, and always received gratefully. The only time I can remember it was refused (politely) was in Tokyo Disneyland Hotel, where the bellboy explained it was "unnecessary and part of the service".
Whether they go back to their offices shaking their heads and muttering under their breath about these gaijins is another thing I suppose
What I would suggest is that one should not tip for every small thing the way it's done in western countries, like for cleaning the room, calling a cab, handling the luggage etc. But if an exceptional service was performed, for example at the StR Osaka, a butler went all the way to the bus depot on her way home, to pick up a book we had left behind on our journey in, then a token of your appreciation is perfectly acceptable.
Whether in monetary terms, or in the form of a gift is up to you. But gift-giving is still a very big part of Japanese culture - you just have to look at the way purchases are wrapped-up and packaged. In the above case, we went to a famous local bakery and bought a cake. And if you do decide to give cash, getting a hotel envelope and "packaging" it nicely is definitely considered cleaner and polite.