Julie,
I'm pretty confident that we're going to leave the geographical naming convention alone.
The radicals complaining about anglicization are most likely trying to score political points; I don't think they care about the "real" names at all. As Ortolan suggested satirically, if we always used native names for places in English, these places would quickly become "lost" to the English-speaking world. (We might write articles on the various movements that want the West to forget about the rest of the world and leave them alone.)
I think we can consider the naming issue settled. It's extremely unlikely at this point that any major change will be made in the foreseeable future.
So the article on Italy will be called [[Italy]] and will start something like:
Italy (or ''Italia'') is a peninsular country in the Mediterranean...
Japan is lucky, because it gets 3 names:
Japan (#* or Nippon) is an East Asian... (sorry, my e-mail program can't show you the beautiful Kanji characters depicting the sun rising behind the trees, ah the poetry we miss!)
Ed Poor