They basically need to rewrite Android from scratch, and then find a way to make all old Java apps compatible with the new Android, too, but I'm guessing that should be easier with ART available.
Yes. My understanding is that currently the Android ART toolchain is:
Java source -> Java byte code -> Dalvik byte code in apk -> install time compile to Oat file for execution in ART
Initially, just looking for something more expressive/succinct than Java that compiles down to Java byte code and is sympathetic to the Android frameworks. Not sure if there are any tools that compile down directly to dalvik and skip Java byte code entirely.
In which language Android core classes are implemented doesn't matter as long as both languages compile down to Adnroid's bytecode.