This is true. Actually just yesterday I finally was giving my Japanese copy of Zero a shot (I played Fatal Frame 1 on Xbox, so when I decided to buy a PS2 copy of the game, I decided to go for very different from what I already have and got the original Zero for the PS2).
Playing through it, outside of the characters looking different...
(Left is how the Japanese Miku looks like in Zero, right is how she looked in the PAL and NTSC release.)
...The biggest difference is the audio. And I don't mean the obvious, "Oh, they're speaking Japanese." Like, there are certain sounds that are added which I don't recall being in the English release, and there's sounds I recall in the English release I don't hear in the Japanese game. For example, in the tape recordings in the English Xbox version, there's usually creepy sounds in the background, like people uttering something quietly or creepy or breathing or something in the audio cassette tape backgrounds. In the Japanese version, I don't hear any background sound outside of maybe static.
And then some sounds they seem to have tackled completely differently. The sound of when you approach the closet next to the kimono room to pick up the tape player, the sound it makes is SO MUCH creepier than the English version sound, which they seemed to have completely changed as there is a voice coming from the tape which is talking in Japanese, but messed-up.