Separation of Church and State was what MacArthur imposed upon Japan, more or less.
Interestingly enough, MacArthur was an Episcopalian. He seemed to have hoped Japan would willingly adopt Christianity and that would produce closer ties to the US, but he was also a liberal minded person and wasn't about to impose it upon the Japanese people.
The presence of Shin Buddhism in Japan, I believe, serves the spiritual needs of many Japanese people, and is the reason that Christianity has not had much success there. Interestingly enough, Shinran, the founder of the Shin sect, had a life story very similar to Luther, and there are many parallels to the Lutheran or Reformed religion. The Rev. Alfred Bloom actually went to Japan as a Fundamentalist Baptist missionary and ended up becoming a Buddhist himself because he underestimated the spirituality of the Japanese people. He wanted to know how to communicate grace to Japanese people, and he already discovered they were familiar with the concept in their native religion.
Japan actually does have a Christian heritage, particularly around the city of Nagasaki. It was the scene of one of the largest martyrdoms in Christian history. The book by Japanese Catholic Shusaku Endo, Silence, and the associated Martin Scorsese film, deal with this time period and the question of what it means to be a Japanese Christian. It's a very moving but challenging story and particularly resonates with me as a Lutheran.