The alien language that they are decoding is a third hand code that PEOPLE are using in the game. Mankind discovered these runes, deciphered them mostly to an approximation of a human cipher, and when they went crazy and started scribbling things on the walls (see the crazy people, not the "aliens", are leaving the scribblings behind before they die) they then started doing in the runes they have translated to an English analog. The transcriptions that people are putting out are also acknowledging there are a lot of letter stand ins and combination's of letters that can be represented by single characters. Soooo, no this "Alien language" is not a direct translation, but what some people in the game world have deciphered for themselves and then started scribbling everywhere.
Readers Steven K., Eamon and Chris A. send this one in late, a screenshot from Chapter 6 in Dead Space that will help the rest of us decode what the alien scribblings on the walls mean. Some smudges on a few alien letters, plus some additional human phonetics (SS and TH, and "dbl letters"), but it's a start for would-be graffiti decoders. Thanks guys. Update: Commenter WandaAlcmaeon has a cleaner version of the cipher here. And gahazakul's comment seems helpful enough for those wanting to fit this into a canonical explanation that I'll highlight it: