If someone pushed the issue, it may very well be. It's probably similar to search itself... it established itself on the web before copyright became an issue, for most people it's just "part of the web" and they don't think about it, but my personal opinion is that if we had somehow made it this far without an Internet search engine, and someone tried to start one today, it would be nearly instantly destroyed in massive, numerous copyright lawsuits. Translation functionality has also been around for a while, and may be similarly sort-of "grandfathered".
No. Google Translate is a tool, just like a DVD burner. It may of course be used in a way that, for example, results in a copyright violation, just as a DVD burner may be used in such a way, but this does not make the tool illegal. The law has been clear on this since VCRs.
