OK I'm going to try to answer your question, but you will have to be patient, because most of that just looked like a load of rambling bull**** (No Offence)
The Japanese (NTSC/J) version of Sonic was coded and released before the US Voice Overs were even recorded, and so only has a Japanese language soundtrack, and Japanese Subtitles.
The US and PAL versions both contained English and Japanese Voice Overs and Subtitles, although the EUR version also has subtitles for users in France, Germany etc.
The US/PAL version, if inserted into a Japanese Dreamcast would most likely not automatically select the Japanese language option, mainly because the program wasn't designed to run on a Japanese DC in the first place, so it wouldn't even bother looking for it. I really can't explain why it is auto-selecting the Japanese option for you, but if you have a North American or European Copy anyway, you can re-select the language into English by going into the options menu. Since I read Japanese, I'll happily guide you through this if you want.
Hope that helped.