Because of some problems with "wikification" of the translated text, I would suggest to add as a recommendation that the article in the target language be placed in a sandbox (or, in a draft namespace if available). I use User:Sir48/sandbox for my translated page, and after translating, I adapt it there before moving it to the article space.
Hopefully, the manual will some day be updated to explain about handling links, refs etc. in more detail :)
Thanks for the feedback, @Sir48.
In our initial testing of the tool we found that publishing under the username space was problematic due to confusions with the process of moving pages (more details here).
Given, that users can work on a translation in multiple iterations before publishing and reuse quality elements such as references, we expect the quality of the initial publication to be better that an initial version starting from scratch. So for articles that do not exist we allow to publish to the main namespace for this or another user to keep improving that first version.
For articles that exist already, which can be more problematic, publishing under the username page is suggested.
Users can decide where to publish the translation by editing the title, although this is not very discoverable. This ticket has some ideas on making this easier to discover.
