You dont need to wait medical or any part of the process just because she is in japan.
Go ahead with the application. You must inform CIC if anyone involved in the application moves to another country. When she goes to japan you must inform CIC about that by letting then know her address in Japan. If, lets say, she lived there for more than 6 months and they had not completed your application yet they could ask for police report for her from Japan, but this would be expected. On the other hand if you dont inform CIC she is living in japan and they find out you could get in trouble.
Medicals: It is completely fine if they want medicals and she is in Japan. All you have to do is to send her medical form by mail. She can go to the designated medical office in Japan and have her medicals there. I done that (my application runs from USA and I did medicals in London, UK). No issue there.
For passport stamp, I dont see a problem if she use fedex or ups to send her passport to you, so that you can send all passports to CIC. Visa stamped you can to the same so she can have her passport back, unless your country has any issues with passports being sent by mail. Check it out
Good luck