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My German father, who lived and worked in Budapest for a long time, pronounced it wrong. I rarely have cause to use the name but when I do, I try to do it justice.
I wouldn't say it's wrong if he pronounced it the German way in German speech. I mean I also don't go around saying My grandma lives is Moskwa and I met my husband in Sankt Peterburg just to keep the native pronunciation. If he talks Hungarian and pronounces it wrong within a Hungarian sentence though...
In German in recent decades it's fashionable/expected to pronounce central European cities the way the inhabitants do. Probably due to the wars and the ethnic transformations..
Sure? I have never heard anyone say Praha or Warszova or anything
Me neither. If someone here in Germany started saying Lisboa or Barcelona I would be thrown off and, very honestly, also find it a tiny bit pretentious.
Edit: throwing in the question how to pronounce towns that are on a border and have both kinds of pronunciations used by inhabitants
Bratislava instead of Pressburg, Ljubljana instead of Laibach, Zagreb instead of Agram.
Lwiw/Lemberg or Brno/Brünn is probably both used.
Prag and Warschau as well as Krakau are firmly used instead of the local ones.
Ok, true. It's a slow process but the trend is there