I tend to doubt that the template game recognizes the language switch. Currently, I am waiting for dialog translations for my GK2 installers. When released there will be the main GK2 installer that will install the entire 6 CD game to the hard drive. There is a fan made English subtitle patch and a new fan made Spanish patch that can be installed into the hard drive installation. I also have a wizard that will convert the installed folder into a package ready to be burned to a DVD. The DVD will be complete with new installer and Autorun. The game can be installed from the DVD with a minimal install, which requires the DVD to play, but no disc swapping. It can also be installed completely to the hard drive for disc free play. The part that you will be the most interested in is that the subtitle patches can be can be installed from the same DVD. The subtitles can be selected from my config tool to turn off the subtitles or select between the English or Spanish subtitles.
The way that I manage this is that I keep the two subtitle patches in separate folders from the regular patches. The config tool is a variation of my config tool that I include with all of the SHP installers. I have added a subtitle selection to it. The tool writes a dosbox.conf based on the user's choices. When a change is made to the subtitles it changes the autoexec line in the conf to use a different RESOURCE.CFG. two differences between each of the config files is the value of the language switch and the first folder listed in the patch paths. The first one listed is the one that the game will use first. Each of the three RESOURCE.CFG files is in a different folder. The game will write its save games in the same folder as the RESOURCE.CFG, which keeps them separate. This is desirable as they are not compatible with the other subtitle choices.
The optional language files are just patch files translated using Enrico Rolfi's
TraduSCI tool. This is the tool that Rolfi created to translate the game into Italian. I believe that the original Spanish subtitle patch was made from the official Portuguese language release of GK2. Don't ask me why Sierra released a Portuguese version and not Spanish. This was made by a Spanish user, "Kelme" in 2003. An SHP user, Laffer, using the Kelme patch as template and TraduSCI added English subtitles. This is why both use language=351, even though English is language=1. Another SHP member has been working to improve the Spanish subtitles by also translating the in-game graphics.
To do it with a new game you could have two sets of text/vocab resources and drop the second language specific files in another folder and direct the game to it with the patch path statement in the RESOURCE.CFG. Question is whether the template game recognizes this statement. You would also need to translate the SIERRA.ERR file. Since the template game may not recognize the language switch you might have to hack in the translation to the UI. I would guess that the menubar is in the main exe. Perhaps you could translate it with a HEX editor. In any case, it would be an interesting project.