Out of the box I don't think it would not be possible to have several site sections for a single domain. However you might consider a custom rewriter which would allow you to mock the behaviour you've spoken about. You can make all pages appear to be under a single domain while actually being on different parts of the page tree. 

My personal feeling is that the rewriter solution could be a lot of a pain. Personally I'd put together a migration plan to move under the same start page and disable the languages that are not appropriate to avoid the translation problem you were talking about.

Its also worth noting that my suggested approach puts the client in better shape for a CMS 6 upgrade as they'd only have to pay for a single site license. 

I did something similar a couple of years ago on EPiServer 5. What we ended up doing was moving the local websites into virtual directories so that they were still separate web applications.

That's a great work around Ted. Did this work out the box or did you have to do any customisation to make things work?

I'm tempted to try your solution Ted, but I have the same question as David: Did you have to do any customizations to make it work? And what about the web.config, that's inherited by the parent site and I can imagine that causing some trouble?

This was a while ago, so I don't remember exactly... But I don't recall any major obstacles. Might have been some minor tweaking involved. :)