1)Because wrapping also would have broken the UI. Printed page, remember? It would have pushed data off the page. And in that particular app, the printed page was a scantron, changing line positions would have moved bubbles and broken the parser. But even in a normal printed page there's a hard bottom and sides you can't write past.
2)Wrapping might take care of it- if there's room to wrap. And if you don't care about an ugly result. And if there's a place to wrap- you can't just wrap mid-word. And if you're in a wrappable language (can you wrap chinese/japanese?). And then we can deal with left to right vs right to left languages and how they'd have to be handled differently.
Translations aren't simple. There's good rules of thumb that will reduce problems, but just saying "oh, do this one thing and you're good" shows you don't understand the problem. Flexible sized fields in particular only work if either the screen scrolls (and you're ok with scrolling) or if you have lots of empty space in the design. A busy design and you're fucked, text will overrun each other.