If you walk around Kyoto's Gion district, there are a few streets that give you this feel, but if you stray but a little from the tourist paths it becomes a mish-mash of architectural styles, everything is encrusted in AC units, exposed pipes are everywhere, and a dense web of electrical wiring looms over everything.
If you walk around Gamla Stan at 5 am in the summer, it's a beautiful, relaxing experience. You can go in almost any direction and there's more of it. If you walk around Gion at 5 am, it feels like you're in a theme-park built on the edge of a razor. Fall off the razor's edge and you're in an urban hellscape.
If you built in this nordic neo-traditional style in Kyoto it would just add more chaos to the hellscape. If you build in this style in the appropriate place, however, it blends in. The right style is contextual. The greatest sins of 'ugly' modern architecture happen when it pays no heed to context.
Sometimes buildings should stand out but, most of the time, they should blend in. It's good that architects are starting to become more aware of this.