Has anyone done a WordPress installation that uses multiple languages?

I have a client who wants to do a site that will have pages translated into about a dozen different languages. I am trying to figure out the best way to do this.

I see a few options.

1. A WordPress multisite installation using different subdomains for different languages.
2. A single installation using categories for different languages. Products and information in each language would be under subcategories.
3. Use a software translation solution, if there is something good that works with WordPress. Most translation software does a real crappy job, so I am hesitant to do it this way.

Has anyone been down this road? I'm looking for advice.