"We believe the Bible to be the word of God as far as it is translated correctly; we also believe the Book of Mormon to be the word of God"
We tend to focus on the historical translation process of the Biblical text when considering this scripture, and forget perhaps that each of us "translates" the scriptures, in a significant sense, every time we read or remember them! All of us, in fact, are constantly creating our own little midrashim, or interpretative stories, to move from words in scriptural language not entirely native to us to some sort of application or way of seeing the world. (Language, after all, as I learned from Punjabi, is as much as system of associations that changes from individual to individual and over time as a collection of vocabulary and grammar. We don't necessarily share the language created to connect God with the prophets, even if it's written some form of English.) We have to interpret the scriptures in order to live, and thanks to the spiritual Urim-and-Thummim of the gift of the Holy Ghost often do quite well, but still need to remember there is always a degree of separation between the text and our interpretations.
And so it is that I believe the scriptures to be the word of God, but understand fully that they are frequently translated incorrectly by myself and my fellow Latter-day Saints!
What makes a translation good or bad?
-To me, the stories we tell ourselves about the meaning of scripture don't necessarily need to be historically accurate to be acceptable. In Tyler Perry's play Madea Goes to Jail, for example, Madea tells her foster child that Peter stopped being able to walk on the water because he looked down, saw Jonah and the whale, and got distracted, which teaches us to mind our own business and not let other people's drama get in the way of doing what we need to do. The ahistorical nature of this thoroughly amusing midrash does more to add to than take away from its moral and spiritual productivity.
-I don't care for the idea, common among fundamentalists of every sect and religion, that a given interpretation must be wrong simply because another one is right. The ancient rabbi Rava used to teach that only the simplest solution for any question only required the use of a single passage (as opposed to a collection of several scriptural sources), and further that the same passage could be properly used to answer a near infinite number of questions! I don't know that I subsribe to the first half of Rava's system, but I enjoy the confidence in the power of revealed words inherent in the second half. Is God so poor that he could only fit a single meaning into each phrase or verse? The experience of most Latter-day Saints is that the answer is no. The same verses speak to us at different times in life with different answers. We are well acquainted with the mystical powers of revealed words, and ought to dismiss fundamentalist stubborness on single interpretations as shallow at best.
-I think an interpretation is only truly wrong when it is counter-productive. Some interpretations are always and inherently counter-productive (if you were to interpret the scriptures, for example, as encouraging you to follow Satan, you will always be wrong), most wrong interpretations, however, are more contextually counter-productive: perhaps useful in a narrow context, but problematic when overgeneralized (for example, overextending a scripture that teaches the productive truth that God can heal to counter-productively rule out scientific medicine).
An important closing question:
Is this current midrash on the nature of interpretation good or bad? What do we get out of it?