I watched Ishiro Honda's Matango for the first time a few days ago (I got it in the Media Blasters Toho box set with The Mysterians and the rather pedestrian Varan: The Unbelievable), and I thought that it had a slight Lovecraft vibe. In particular, it made me think a little of "The Color Out of Space." Does anyone know if any translations of Lovecraft existed in 1960s Japan or if Honda or scenarist Takeshi Kimura had read any of them? (It's entirely possible that the answer is "no," but I find the idea of Ishiro Honda trying to make a Lovecraftian movie to be an intriguing one.) I know that some 90s/2000s J-horror is Lovecraft-influenced, but is it possible that the influence goes back farther?

For what it's worth, I think Matango is loosely based on a story by an English writer Lovecraft admired.

There has been much discussion of this -- surprised you missed it. But, in any case, the original treatment for MATANGO was based on The Voice in the Night, a 1907 short story by William Hope Hodgson. Toho hired two noted science fiction writers, Masami Fukushima and Shinichi Hoshi, to adapt the story (Sakyo Komatsu also contributed, uncredited), and the screenplay was written by Takashi Kimura (RODAN and THE LAST WAR) -- this is all in the Japanese opening credits for the film, so your suspicions were correct.

Toho was a big studio, and like it's American counterparts, had a Literary Department, which purchased the rights to numerous novels, short stories and other literary works, which could be adapted into motion pictures. The Japanese have a long tradition of science fiction literature, dating back to the late 1890s, with Shunro Oshikawa, who followed in Jules Verne's footsteps (he wrote a series of stories which eventually became Toho's ATRAGON).

William Hope Hodgson
http://alangullette.com/lit/hodgson/

The Voice in the Night
http://gaslight.mtroyal.ab.ca/voicenig.htm

VARAN has an interesting history; it was originally commissioned by the US company, AB-PT Pictures (a join venture of Paramount Pictures and ABC-TV), which was looking for low-budget films to distribute the theaters and then syndicate to television (they only produced BEGINNING OF THE END and THE UNEARTHLY before folding), and they had previously been involved in the aborted U.S. adaptation of GODZILLA RAIDS AGAIN, titled "The Volcano Monsters" (scripted by Ib Melchoir).

During principal photography on VARAN, AB-PT either folded or pulled out, and left Toho high and dry. Since the film was primarily planned for Japanese television broadcast, the film was not shot in "Tohoscope"), and was cast with third-tier actors. Since Toho was already deep into production, they decided to press on, and shoot the screenplay as a widescreen feature film release -- and cropped the previously-shot 1.37:1 to 2.35:1. Even composer Akira Ifukube went back into the studio to re-record his score with a larger orchestra for the theatrical release (his first recording sessions are dubbed "TV Version" in Japan).

VARAN wasn't originally intended for theatrical release in Japan, which is why the film feels so "pedestrian" (as you put it). But, it is notable for several reasons: it contains one of Ifukube's best genre scores; Tsuburaya's effects work is top-notch in Varan's attack on the village and his battles at sea; and Shinichi Sekizawa's screenplay features the foundations of what made the 1960s films so beloved, which was refined in MOTHRA: a trio of main characters, the mysterious "throwback" villagers/natives, the worship of a "monster god," etc.

A television version of VARAN, to be shown in two parts in Japan, was still envisioned, but was eventually cancelled (an uncompleted version is contained on the Japanese DVD and was transposed to the Media Blasters release).