Does Apple allow the use of iTunes gift cards (in this case a Japanese iTunes gift card with a Japanese Apple ID) to buy an in-app purchase (for in-game currency)?
Why would it not be allowed by Apple?
If it's a Japanese iTunes gift card for an Apple ID with the Japanese iTunes Store, then that's what the gift card is for. You can use it to purchase Apple software, 3rd party apps, music, etc so long as they're from Apple's Japanese stores (i.e. iTunes Store, App Store, Apple Music, iCloud, etc). In-app purchases are included as well.
What you would not be able to do is use it to add credit to an Apple ID based in another country or connected to another store. For example, if you had another Apple ID for the US iTunes Store, then you wouldn't be able to redeem a Japanese iTunes gift card for that Apple ID.