I'm sorry to be the one to tell you this...
I doubt it'll be as easy as just replacing the text. If it were that easy, then PCE translations would be abound.
Assuming the text in the PSP game *uses* ASCII format so you can find it, you'll need to a hex editor to find the japanese text string format and a tile editor to change the hard coded text. There's the fact that replacement english strings won't properly fit back and you'll have to find the text pointer tables and make changes. The also no guaranty *all* the text will still fit. You might have to shorten phrases and content. If you get that far, there's also the issue that the system uses a larger font. You won't be able to fit many roman characters in a single line, which looks terrible. You'd have to know PCE assembly, hacking, the cd system arch, and spend hours trace through the original code to find out how it works. Hopefully there will be enough space to even change it (for the new replacement code). And since it's a CD game, there's no guaranty each level/area will use the same 'print' function/code or that any free space you found isn't used later in the game.
Then there's replacing the ADPCM and CDDA audio parts. That's probably the easiest thing, you still need to find a way to locate the ADPCM inside the data track, i.e. more hacking knowledge required.
With all that said, I know of another person who was working on this game. He has a replacement print routine up and running for the cinemas. He might know of the ADPCM locations -
http://www.rpgclassics.com/subsites/twit/archive.html