While HWR for Japanese isn't there yet, the iPhone does support two other VERY intuitive Japanese input methods (intelligent romaji entry and a kana pad):
https://www.macrumors.com/iphone/2008/05/05/japanese-input-keyboards-on-iphone-2-0/
The kana pad is very intuitive and works the exact same way text entry does on current japanese cell phones.
In the words of someone (else) from japan:
[The last quote was about someone declaring Apple's way to be a huge improvement over that which exists already, using the endearing term "SUCKS."]
Sorry, but I'm pretty sure that as a Japanese living in Tokyo, your view here is highly optimistic.
What you say makes sense if the game were one of trying to poop out phonetic possibilities (refer to your own link). However, current text conversion software does a whole lot more than what Apple seems to have slapped together. The fact is that apart from the small conversion box (which certainly does have room for improvement), the term "SUCKS" isn't very appropriate when it is smart enough to come up with common phrases instead of phonetic declensions. That is, typing in "o-hi-sa" gets you "o-hi-sa-shi-bu-ri-de-su," or "long time no see," for example. If you know Japanese, you know this to be very useful, as there are so many frequently used phrases of the sort. Typing in "o-he-sa," you want to get the same. In either case, you shouldn't see "a-ha-sa," which means nothing, or "a-ho-sa," which declares yourself to be an idiot, but Apple's conversion would probably give this, judging from the link we've all seen, because all it does is cycle through phonetic possibilities and then convert those to kanji where possible.
To a student learning Japanese, that might be useful. To a Japanese, it's a farce. Any idea that Apple throwing something so primitive together should somehow turn out to be a vast improvement is difficult to entertain, especially since Apple's text conversion is a couple steps behind Windows's on computers.
I understand wanting to be optimistic, but this in all respects looks like Apple doing the least it can to have the iPhone be marketable at all, and this naturally falls far short of what the Japanese demand of their cell phone markets.