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I think there is legitimate room for not-for-profit fan translations of light novels. They can provide a means to build interest in a series as well as provide a base indicator of potential. It can also provide an outlet for novels that are less likely to be picked up by EN publishers in the short to medium term. All you have to do is look at High School DxD. the fan translations of the first series (25 volumes) was completed 13 months before the license was announced by YP. Then there's Saijaku Muhai no Bahamut which is also completely fan TL'd and, as far as i'm aware, has never even had believable rumors about it being officially licensed.
The things that curtailed anime piracy obviously wont work for novels and manga but i think if publishers really thought open-mindedly and put their collective intelligence together, they could probably find a way to fit fan translations into the LN ecosystem without harming their own interests. Of course, that would probably require a seismic shift in thinking, especially from japanese publishers, but where there's a will there's eventually a way.
That said, i agree that fan translations should be at the earliest reasonable opportunity upon publication (perhaps in some sort of staggered buffer system if the fan translation can easily outpace the official TL or is already far far ahead when the series is licensed.) be removed to limit any 'competition' to the official translation
On the subject of fan translation quality, i dont think it's uniformly
