I don't know when you taught here, so hard to say but a couple of things have changed in the last 10 years or so. First, they have introduced a "foreign language" class for elementary school children. I know some people who have taught it and they have a lot of praise for the program. It focusses on simply interacting with foreigners and includes many different languages. Personally, I've noticed a big difference in my rural town in Japan. Small children now often walk up to me and try to use their English. They always seem thrilled when their phrases work ("Hello. My name is Tarou. What is your name?", "I am fine. How are you?", etc)
Also the instruction of both junior high school and high school English has changed. It is now (officially, anyway) taught using only English in the classroom. I left the year before it entered high school, so I never officially participated, but I got some of the students who went through the junior high program. Even in my very low level school, the fluency improved dramatically.
Finally, they began demoting teachers with poor language skill a few years ago. It's actually a bit unfortunate because some good teachers got demoted whereas poor teachers with good language skill got promoted. I suppose you can't have everything.
Anyway, they are improving over time. The one thing I should point out is that teaching language fluency is actually very difficult. Things like grammar translation is still considered the best technique in many universities. Even though Pimsleur demonstrated the effectiveness of spaced repetition in the 60's, virtually nobody builds lessons that way. If you look at the ideas of Stephen Krashen and techniques like TPRS, even though they are very effective for fluency, only the lunatic fringe utilize them.
I actually gave a demonstration of TPRS (and related skills like circling) to the Shizuoka board of education once. They seemed very excited and even said, "This is the way English should be taught", so I have some hope that they are looking in the right direction. But again, nobody gets this right. Even the most effective techniques are still quite barbaric IMHO. It's one of the reasons I'm sad to be out of language education. Lot's of important discoveries to be made ;-)