Also, how is it "obvious" one translation was intentional and another was a msitake?
Assuming that the poster wasn't being sarcastic, here's the way I see it:
"Midgar" has been called a mistranslation of "Midgard." However, thanks to additional Compilation entries, we know that "Midgar" is, in fact, official*. The Zolom's swamp is in close proximity to Midgar. Things are named after adjacent areas all the time, hence "Midgar Something" makes perfect sense, as a name.
I'm not 100% positive on this next part, but I also believe that "Zolom" is another word for "snake," in some such language, or a reference to such a word.
In the end, it's impossible to know for certain until another title comes along with the serpent in it, but all things considered, I think it's more likely that the name is intentional, rather than a mistranslation.
*=Midgar isn't alone, either. Nibelheim was called a mistranslation of "Nifleheim" before Crisis Core came out. The problem is that people are too quick to label something as a mistranslation, rather than a reference.