I could try to make it more seamless by imposing this limit based on cookie or IP address if they aren't signed in yet.
Would love to know what else you found confusing about the UI?
One irritant was getting the phrasal popup repeatedly. Once it's appeared, I pretty much already know I can't do that (as noted by others already). The default should be something like deselecting the first word to allow me to look at the other. Put a non-modal message somewhere obvious that says "hey, if you log in you can see phrase translations, too".
I think your idea of seamlessness with a cookie is really promising. Let me see what it does, but warn me that I'm going to run into a limit. Maybe.
There was no real try-it-out-now link (that I saw - I'm not looking at it now, just reporting my perceptions at the time) except for trying it out on the Spanish quote - which again, I found remarkably clever. But the result is that I wasn't entirely clear about what you were actually offering. Possibly a little picture of the main UI somewhere on the front page might help. Not sure on that - as I said, it wasn't that difficult to poke around and find things once I decided I was interested, but I normally don't notice that phase at all, if you see what I mean.
Hope that helps.