Earlier quoted context omitted.
I always liked the BBC's approach -- English words and well settled loan words are allowed to have regional pronunciation, foreign words go via the pronunciation unit. So news readers pronounce (or try in the case of that Icelandic volcano) locations, names etc as they are intended to be. Names are personal, it's offensive to mispronounce them. Make the effort, even if it involves struggling a little with sounds that…
I'm generally in agreement and want to anticipate an objection—that the sounds of foreign words often fall well outside of any given person's native set of sounds. Take Iran for example. It's rendered often in English as [ɑɪ.ɹæn] (eye-ran). What it "should" be is [i.ɾɑn] (ee-rahn). Fortunately, all the sounds in [i.ɾɑn] are ones that occur in most varieties of English (with the exception of the [ɾ], but that's minor)…
In fact, in a case of politically questionable names it could even be seen as a sign of antirevisionist acceptance to introduce a badly butchered (if necessary) transcription and pronouncement of the local name into a language that used to have a name that isn't acceptable anymore.