Maybe if *something* existed modders would use it...?
For providers (I'm assuming you mean people who run servers who don't have full control of the server?) the scriptable solution would be to put all the mods in a folder you control and can run scripts against, generate the Localization.txt file, then copy it over manually to the server. Ugh

but the worse problem I believe is getting modders to put their localization's in a separate file so at least it can be easily manually added and/or scripted against.
For my own mods I'm working on I created a script that can "merge" Localization data in mods into the master Localization.txt file. There are many caveats but it's a "brute force" script that appears to get the job done.
Anyone interested? It will need more work before it's "easy to use", but it may provide a common tool for mod developers to handle the Localization issue until it's handled in the core game. It *does* make some hopefully superficial changes to the core Localization.txt file, so I'm not sure yet if the changes matter, esp. since there's a lot of odd characters and things in it.
Notes:
1. Inside the mod folder (e.g. Mods/<mod name>

, there must be a Localization.txt file. The csv format of this file is identical to the game Localization.txt file
2. The script is written in perl, so Windows users may need to install it (recommend ActiveState Perl), Linux will likely have it installed. Not sure about Macs
3. It was written on Linux, so it's possible there may be some issues on Windows with file paths (it *should* work, I haven't tested it)
4. You have to install 1 perl module from CPAN (Text::CSV). On windows this involves knowing how to run PPM to install the module. On Linux it may involve knowing how to install it so it doesn't install in the root perl. I'm likely going to try to bundle the module with the script to get around all of this.
5. In theory, because it will merge changes to a localization entry not just add new entries, with the script you could create a "mod" that was only a Localization.txt file to "fill in" missing localization values in the core Localization.txt file OR completely change the localization.txt values that already exist.
6. In theory you can make the same types of changes to mod the "Localization - Quest.txt" file, but the script would need some more changes.