OP, thank you for your work, I will continue to watch it. I tried to built something similar, but what I didn't discover and think is crucial is the proper FE: yes, word segmenting is useful, but if I have to click on each word to see its meaning, for how I learn Chinese by reading texts, I still find Zhongwen Chrome extension to be more useful, since I see English meaning quicker, just by hover cursor over the word.…
The (awful and incorrect) translation you've pointed out comes from the segmenter being too greedy, not finding the (non-existent) word in any dictionary, and therefore dispatching the word to be machine translated, without context. This is the final fallback in the segmentation pipeline, to avoid displaying nothing at all, and my priority right now is making the segmentation pipeline more robust so this rarely (or never) happens, since it sometimes produces hilariously bad results!