This post has an explanation of how the translation works, but if you just want to apply it, you can use this awesome page made by darkman424. It's what I've been using for translation ever since he posted it, because it's much quicker than manually figuring out each letter, so I would highly recommend it. I've been trying to decode the chat filter between the races since the Closed Betas, and I've made some progress. I've got enough information to figure most of it out, and have seen enough to say for a fact that figuring out what the other side is saying is fairly hard. I'm not done looking through the information and writing up my findings, due to the game being out, but I'll get it done eventually. However, I have done enough to know how to talk to the other side, one letter at a time.

Basically, the first letter of any word will decode in a predictable way, so by putting a space between each letter, you can type to the other side through a simple filter. The way I've been typing is to use one space between letters in a word, and three spaces between words to clearly distinguish them. This table has a list of how to type to the other side. The top row is what you want the other race to see, the others are what you type. If any of this is unclear, ask and I'll see if I can clarify. I did take this from my post on our Legion forums (with some modification of course), where it was focused on how we as Asmodians would use it, and had a couple pages of my theories and explanations before this table, so its possible that I missed something that wasn't made clear here.