Aaron Eckhart really does speak fluent French. He served a 2 year mission for The Church of Jesus Christ of Latter-day Saints (Also known as LDS or Mormon) in France and Switzerland. He has since left the church.
When Frasier tries to one-up Frank in the restaurant by speaking French to impress Charlotte, Frank responds by speaking French himself. These exchanges are seen with English subtitles. When Frank (in French) tells Georges the waiter that he is going to stay for dinner, Frasier's subtitle shows that he is thinking the French word "Merde." This word evidently is too strong for the censors as it has been blurred out in recent years.
This is not only the last episode with Frasier's name in the title, but the last episode with any main character's name in the title.