DBC can dump the entire content of the database into TXT or XML files, right? Do you have any personal experience of this?
No, I don't. I just read it in the list of features: "Import/Export from/to text file."
Now the client is paranoid that the links between the Paradox files will be lost/corrupted. XML would be the safest bet to make sure it won't happen?
I believe the export format doesn't matter, as long as you import the translated data into the tables correctly. You will not change the database structure, you will only translate its content. It's just important to translate the key fields consistently, because they are used to maintain the relationships (for example, a product name used in one table has to be exactly the same as the same product's name in another table that is linked to the first one).