Soon to be saying goodbye to Taiwan, some (local) friends of ours have invited us to a very expensive restaurant for a farewell meal. These people are not wealthy, nor are they in the gutter, but we feel uncomfortable going to such a larney place and not at least splitting the bill with them, which I’m sure they’ll refuse to do. In another country, I would just suggest going somewhere more ‘down-to-earth’, but with all the face-saving going on here, I really don’t have a clue how to handle the situation. Any suggestions?
Don’t consider it, hesitate, wonder or offer to pay, just say yes to their offer and go enjoy it! When you have finished your meal with them say it was the best you ever had and thank them. If they ever come to visit you back home treat them in the same way and make sure you pay the bill before they even realize it.
If its a question of face-saving, accept gracefully, enjoy the evening and make sure you repay the compliment if you ever get the chance. Alternatively, you could fight it out at the counter when its time to settle the check. That will entertain the other diners. 
I’ve already tried this “fighting over the bill” business with these friends and others, and, not speaking the language puts us at a serious disadvantage: we hardly ever win! While it’s great to have your meal paid for on occasion, it gets embarrassing, and even downright annoying, after a while!
JeffG and Sandman, I think you’re both right: accepting graciously is probably the best thing to do, and hopefully we will have the opportunity to repay their kindness sometime down the road.