It's slightly an old topic, but i've been doing some more research, and thought, that maybe if the FM translator (K277AZ) was put up on a water tower by Perry Ave. in East Bremerton, or somewhere on Bainbridge Island (although I don't know if the islanders would be happy about that, even though it would be their station too!) and made it up to 400 watts, toward Bremerton and Downtown Seattle, if that would make it legal? (Touching an advertising base in Kitsap County as intended, as well as Downtown Seattle).
The maximum permissible power for a translator is 250 watts.
Translator coverage may be further limited by the need to protect other stations.
Remember also.. that the translator coverage may not exceed the coverage of the AM station it's relaying. I don't recall the exact figures offhand. You can't use a directional antenna to evade that requirement. (figuring whether the translator coverage exceeds the AM coverage, you must take the translator's directional pattern into account)
City-of-license coverage rules don't apply to translators.