I doubt that's what he meant. Even if the character says -san, it has no place in the subtitles IMO, since such a honorific doesn't exist in the English language, and there are ways to translate it. As for HOTD - honestly, I'd take "cutie" over "-chan"; it doesn't sound bastardized to me (although I'm not a native speaker, as you know), and at least they tried. In the English dub, she says "darling", and that's also totally fine by me. If you're doing an Engilsh translation, you're doing it for an English-speaking audience - you don't assume that your audience knows about Japanese honorifics. I'd go into more details, but the video I posted above pretty much does it in my stead.