I just spent a week in Japan back in May and used my Sprint TP2 (stock ROM) without any problems. I too did a bunch of research before hand and found the process confusing.
1. The comment regarding it being illegal to use a pre-paid SIM if you're not a Japanese citizen is true. I couldn't find a pre-paid SIM anywhere.
2. So, I ended up calling Sprint and added the international calling plan for $4.99/mo. This cut down the calling rate from $1.99/min to $1.69/min. Since I only needed it for a week they prorated the amount for the time I needed it. Sprint sent me an email with instructions on setting the phone for GSM use (same instructions as posted above). As soon as I landed in Narita, I changed over to GSM and the phone found DoCoMo (Japanese carrier) right away.
3. Part of the instructions they sent was how to dial a local (Japanese) number vs. a US number. Short story is to dial a local number I just dialed the number. To dial back to the US I had to enter the country code first.
Service while I was there was great. Never dropped a call and sound quality was excellent.
Other options to using your cell are:
1. You can rent a cell phone with pre-paid minutes from one of the local carriers. There are kiosks at Narita airport (possibly others) that you can rent from. Most of the ones I looked at you need to schedule your rental and pick up ahead of time (this can be done online). Once the reservation is made, you jsut pick it up when you get there. Here's a link
http://www.narita-airport.jp/en/guide/service/list/svc_19.html
2. MagicJack - If you have one bring it. If there is a high seed internet connection in your hotel room (or wherever you're staying) just plug it in, connect the phone line, and you can make calls back to the US as if you're calling from home. Didn't do this myself on my Japan trip (forgot to bring it) but I did it when i went to France in February. Worked great.