I, too, grew up partly in Taiwan and am now living in the States. I'm from South Taiwan, and quite often frequented the town here the movie takes place.
There are indeed a bunch of Taiwanese humor, and due to such may be difficult for those who are not so adjusted to the culture to understand.
The plot was touching, and environment VERY local--I'd even call it authentic. It's not exactly an OMG AMAZING script, as plenty of Japanese cartoon (anime), with which many Taiwnese are familiar with, and a lot of older Taiwnese stories that are based around the general plot. However, that is not to say the movie wasn't creative, as it is arguable that there are only 5 stories, and seemingly infinite ways to present them.
I personally loved the movie. It was touching, and admittedly, I cried--from flooding nostalgia of memories past.
Because the majority of the movie is based on Taiwanese culture, it is definitely a hard one to push internationally, especially in the western part of the world.
However, I felt that a movie like Cape No. 7 was long overdue in Taiwan, and believe that it is a first step for Taiwan to take to gain international footing in the movie industry.