1. Can LLVM be used in a dynamic binary translator? Dynamic translator translators target
code for an architecture (say PPC) to host code (say x86) and execute it.
Yes, see llvm-qemu project (2007 GSoC).
2. Can LLVM understand disassembled target code and generate optimized host code?
No, it's not a job of LLVM. You have to convert binary code for your platform into LLVM IR by
4. How complex the task would be? (any idea!!)
It depends, how complex and insane your source platform, how you will use produced code,
etc. In any way, I don't see generic way to do so 'statically', only via execution (think about
indirect/computed jumps, for example).