How to make it work across domains?

Well I figured it out.

In function languagepath($lang), add sth like:

$domain = db_result(db_query("SELECT domain FROM {languages} WHERE language = '".$lang."'"));

Change $path to sth. like this, for nodes:
$path = $domain . '/' . drupal_get_path_alias('node/'.$destination_nid, $lang) . $remaining;

For other pages:
$path = $domain . '/' . $remaining;

Fancy stuff. Maybe mod maintainer can turn that into an "optional feature" or config setting.