It should be noted from the outset that romanization is not a 
facet of Japanese culture. There is no tradition in Japan that 
states that things must be romanized a certain way; how could 
there be? Romanization is western culture attempting to 
render the Japanese language into it's own written alphabet. It 
also follows that there is no "traditionally correct" version of 
spelling.

Close, but not quite true. The Japanese use romaji to teach children
at primary school the Japanese system. And the Japanese Education
department of the Government prefer the kunrei system (ta ti tu te to,
sa si su se so, etc). Another part of the government prefer the
'o' system (Standard system) ... But the third system (or fourth) is
the o with a - on top (or the o with a ^ on top)... This is the system
that gets translated to 'ou' on computers.

   And now we get to the serious "ou" problems. Under this 
system, Akane's father is named "Souun", and he runs the 
"Tendou Doujou". I've only seen this spelling in Kun-chan's 
fanfics, _but_, if we hold that "Ryouga" is the proper 
romanization, the same grammatical laws say "Souun" is the 
correct spelling. Kun-chan is being consistent with the system.

   Well, mostly consistent. You see, the same "ou" romanization 
system calls for the capital of Japan to be spelled "Toukyou", 
which Kun-chan stops short of doing. And the city of Kyoto 
would likewise be spelled "Kyoutou".

I'm sorry, you got that bit wrong. :p

yoyo [20:53][42]~/public_html> grep Tokyo *.txt
yoyo [20:53][43]~/public_html> grep Toukyou *.txt
ran_love.txt:[The Outskirts of Toukyou]

So the only way I've spelled the name of that city in the fanfics is
'Toukyou', and I haven't once spelled it 'Tokyo'. Go to the home page
and look yourself. :p

   As for authorities' preference, I offer the following.

* Every atlas I've ever come across has used the "o" system.
* The AP uses the "o" system when romanizing place and 
person names.
* My Weatherhill Kana textbook uses the "o" system.

   I've never seen a official source using the "ou" system, 
though this may be due to a lack of looking on my part.
   In fact, I believe the "ou" version might be common in 
Australia due to their spelling of certain English-language 
words.
   Thus, while the "ou" spelling may be correct if you're 
romanizing into Australian English, it would appear to be 
inncorrect for American English. Bear in mind that "correct" is 
a relative term.

Go look for the Hepburn system. My dictionary says "most generally
used" of that system. "The Hepburn system is used throughout this
dictionary as it is considered the easiest to use insofar as
pronunciation is concerned."

   The bottom line is that there's evidence for using either the 
"o" or "ou" system. Most people, however, seem to use a 
mishmash of the two, which is grammatically incorrect by 
both systems. But hey, if it works for you...

I can think of a few reasons why 'ou' is better than 'o'...

It shows the difference between a short Japanese 'o' and the lengthened
Japanese 'o'... And it also shows the difference between 'oo' and a
lengthened Japanese 'o', as they sound the same.

'o' System			Hepburn System

honto				hontou

okii				ookii

(I assume that the 'o' system
doesn't show the two 'o's, as
it's a lengthened sound...)

Basically, the 'o' system doesn't show pronunciation, where as the 'ou'
system does.

Kun-chan...