The Prophet(peace be upon him) said “Pray your prayers as you see me praying”.
Doesn’t this imply that we have to pray in Arabic language since Prophet only prayed in Arabic language? Another Hadith regarding the obligation of congregational prayer is that the Prophet told a blind companion to come to Mosque even if there was no one to lead him to the mosque. Doesn’t this tells us that congregational prayer is obligatory whoever calls for prayer?
The Qur’an says:
Say (oh Prophet), verily I am a human being who receives divine revelation – Al Kahf 18:110
When we want to say the Shahadah, we say “I declare that Muhammad is his (i.e. God’s) slave and Prophet”.
Our Prophet, like every other Prophet, lived in two different but consistent capacities, capacity of a human being who receives revelation and capacity of a human being who is (like any other human being) bound by humanly restrictions.
In following the Prophet, it is important to distinguish between what he used to do in his capacity as a Prophet who teaches others, and what he used to do as a person. This is a general rule that we need to consider when looking at every aspect of the Prophet’s life. So for instance when the Qur’an says that the Prophet is our role model in being good (33:21), some of the implications would be that we need to remember God when start eating and we need to be modest in wearing dress. It however does not mean that we need to eat the same food that the Prophet used to eat and that we need to wear the same dress that the Prophet used to wear.
The reason the Prophet used to offer his prayers in Arabic was for the simple fact that he was an Arab. It is not difficult to imagine that if the Prophet was (for instance), Greek, he would offer his prayers in the Greek language.
It is therefore possible to say that purely from the point of view of following the Prophet, we cannot say that obligatory prayers should be read only in Arabic.
There is however another important aspect into this: Part of our prayers, and in fact the main part of our prayer is reciting from the Qur’an (this is Al Fatiha and selection of the verses of the Qur’an that are read after it). Obviously no translation of the Qur’an can deliver the same meaning, the same effect as well as the same beauty of the original language (that in this case is Arabic). Also because of the extreme emphasis of Islam on unity and harmony among Muslims, it is very important for Muslims to be able to read and understand at least few of the chapters of the Qur’an in its original language. This is required, not only to be able to take a better benefit from the book but also to be able to contribute to the united and harmonious society that Islam provokes.
It is followed from the above that the fact that the Prophet used to read his prayers in Arabic does not make it obligatory for us to read our prayers in Arabic. However, parts of the prayer that contain reciting the Qur’an have to be read in the original language, i.e. Arabic (interestingly enough, these are the parts that are needed to be read in a load voice during congregational prayers that take place in dark). This is for the individual to take the most possible benefit from the divine words and for the society to remain consistent and in harmony.
As for the hadith that you mentioned with regard to whether congregational prayers are obligatory, please refer to previous answers where this hadith and similar ahadith are discussed.