It's not really "dedicated", it's just SIMD for FFT like most signal processing. Takes about 25 MIPS: https://retrocomputing.stackexchange.com/questions/2672/why-...
You can get dedicated MP3 low-power decoder chips. You might have one in a fancy PC soundcard (SBLive?), but I don't think it's included in baseline AC97.
(I remember having a 486DX that could decode MP3s with the Fraunhofer player at about 95% CPU but not Winamp, which was slighly too slow to keep up)
Does this also hold for modern smartphones?
I don't know exactly; the chipsets tend to be closed. I've seen baseband processors which have the AMR codec in hardware (adaptive multi-rate, used for GSM phone audio).
No, because it's so easy to begin with.
Doesn't mp3 transcoding have dedicated hardware instructions, making the job much easier?