Does this still happen with latest? the po files seem to exist and have
translations in them...

gdm-2.4.0.4-1 says:
"Welcome to <hostname>

Please enter your username"

The Options menu says: "Select a language for ...", although the buttons are
translated..
The System menu is also untranslated..

Oh, I see - gdm doesn't use the system language, you have to set the locale 
in /etc/X11/gdm/gdm.conf. It's been that way for several releases...

setting it in gdm.conf does no good either from what I can tell, _and_ it's broken to have a 
separate setting.

I had to telinit 3 + telinit 5 after changing the language in /etc/sysconfig/i18n

alex are you saying gdm does use /etc/sysconfig/i18n for you?

yes. if i restart gdm

harald, does /etc/sysconfig/i18n work for you? 

Here is the relevant code:

/* no language set, use the GdmDefaultLocale */
  if (GdmDefaultLocale != NULL &&
      strlen (GdmDefaultLocale) != 0 &&
      g_getenv ("LANG") == NULL &&
      g_getenv ("LC_ALL") == NULL)
    setlocale (LC_ALL, GdmDefaultLocale);
  else
    setlocale (LC_ALL, "");

/etc/sysconfig/i18n works for me, and I believe if LANG/LC_ALL were unset it
would fall back to the thing in gdm.conf.

Reopen if someone else can reproduce it not working...