No the final fantasy III/VI fan translation is not better than the official. You don’t even need to look at the original Japanese to know that “imperial witch” is correct and “imperial bitch” is not what is being said.
Consider that Vladimir Nabokov rarely, if ever, mentioned that one of the very first works published under his Russian pseudonym was a translation of “Alice in Wonderland”. It was a very thorough work in which each twist was given a match from more or less similar saying, poem, nursery rhyme, etc. Alice became Anya, and names got translated to something familiar to kids. The thing is, one might wonder where Lewis Carroll was in that. What is worse, because of the Revolution, almost all of the rhymes and jokes to which he alluded would be unused by next generations both inside and outside the country, and therefore forgotten.
(also look at the other reviews)
It's hard to complain about something that takes a ton of work and is given freely, but I can't help but notice that fan-subs of TV/film seem to be of much better quality. It may be that text heavy games are so much more time consuming, and game translations often seem to be solo-projects (which is damn impressive, even though the end result seems to suffer for it). I haven't gotten into fan-subbed novels, but I wonder if they tend to have the same problems.