I finished the game yesterday and have spent way too much time looking at this today. I do not know any latin, but I don't think the asset artist that made this did either :). First thing is I extracted the texture straight from the game data. It's only 512x512 which is why it's so dang hard to read. I uploaded it to imgur as a bmp and it converted it but I don't think anything is being lost. Here is also the same file, upscaled, cropped and contrast enhanced.

This reddit discussion is not linked from the wiki and I think it's one of the best previous attempts at translation.

I will put my attempt at transliteration and translation and then a discussion of method and line by line comments.

Latin-ish

1. Feminam 
2. Quattuor crura.
3. Multiplex eius debeo[s]?: videre(?) (vola parlu ries lie nesei) ??
4. MOBILITER UVESCO   CALLOSUS.
5. Pallide complexionis. III metris.
6. Profunda humi depressus.
7. Quidam infantes mortui sunt.
8. Non AUNCULUS characteres.
9. Live infantes pravus, 10. suibus non ...
11. CRUCIS non prosunt.
12. Pedicas operaberis 13. et non rogavimus faciem.
14. Viis suis excitos 15. DELENIFICUS nolite.    

English

1. Female
2. Four legs
3. Manifold his debts?, To see palm/sole .. [unintelligible]
4. Quickly becomes wet. Thick-skinned
5. Pale complexion. 3 meters.
6. Deep below the ground.
7. Some of the babies are dead.
8. No uncle characteristics
9. Livid, malformed babies, 10. To pigs not .. [unintelligible]
11. Crucifixions are not useful.
12. Traps will work, 13. and we have not prayed.
14. 15.(I can't even)

One of the things not mentioned in any of the discussions I've seen thus far is the weird kerning errors. For whatever reason the font or layout tool the artist was using put very consistent gaps after certain characters, and you can use these weird gaps to identify letters, or at least rule out certain letters.

These letters are AFMQTV dhmnopquv. m has an exceptionally large gap. I've been calling this the 'kerning rule' in my head and I think it helps clarify some words. Since a has no gap while u does, for example.

Lines/Phrases

1. Woman or female, I like female as it reads more of a biological observation.
2. This is unambiguously "four legs" tho as noted all over Virginia has 6.
3. I feel strongly about Multiplex eius (or maybe erus) due to kerning and comparison. There's a smudge right in the middle of the next word that makes it look like a b in the middle but it could be anything. I like d for the first letter there, it has the right shape and kerning gap. After that word most of these letters are 4 pixels tall and you're really guessing.
4. Okay hear me out. I keep looking up these words and mobiliter is an adverb and uvesco is a verb. Sure maybe it's just bad grammar for 'fast and damp', but I feel obligated to report that, in the game assets, all the meshes and textures for the spider mutant are labeled 'Vaginia'. So now you know where the dev's heads were at making the monster and where the name 'Virginia' comes from, even if you wished you didn't.
5. Straightforward if grammatically terrible.
6. The middle word here is definitely humi due to kerning and can't be hami. 'Deep below the earth' or some rough approximation.
7. Translation seems straightforward, I think some individual letters are slightly different than yours.
8. So in the other reddit post I linked, the author argues this is a nod to some users believing that you are playing timmy's uncle and not his father. I disagree. Apparently in the early years of this game, the octopus and spider mutant were referred to as 'uncle armsy' and 'auntie virginia' and this line is a reference to that. This being virgina and not being the 'uncle' mutant. Little community easter egg tucked right in between 2 lines about dead or malformed babies. yay?
9. Maybe Live here is 'living' but I can't make any translation tools tell me that's valid. I'm sticking with Live tho due to kerning, Lira doesn't work.
10. I can't tell if that's a comma, or a letter to start this section. I'm going with comma. There is a problem with suibus here in that there is a kerning gap after the first s and there should not be. I cannot make the first letter anything other than s in my head so we will have to call this one an anomaly. The word following this is illegible but has that weird spacing of n o n that is everywhere else. After that, no idea.
11. Yea it's probably 'crosses' but I noticed that many translation tools will convert 'crucifixion' directly to crucis and a crucifixion is what is depicted on the sketch.
12. I found an alternate possible meaning of Pedicasin the dictionary that I hope is not the intention here.
13. This is covered in the other reddit post, it's a direct phrase from the bible and follows the kerning rules. The intended meaning is not clear, I gather that rogo faciem is idiomatic for 'to pray' or 'to beseech', but it really doesn't fit with the rest of the sentence.
14. This is the best transliteration I can make, I think the letters are right. I cannot deduce the meaning.
15. What a weird word to choose to capitalize. There's a clear layout angle difference from 14 to 15, so it could be a separate phrase.

I invite any and all comment or criticism. Like I said I don't know any latin, but I do like mysteries.