How does dynamic linking work in a scheme like this? Would any pre-compiled libraries need to be distributed as Bitcode as well?

Due to the concerns above, IMO Bitcode is less about compatibility and more about app thinning. It's pretty easy to go from Bitcode to 4 different variants of ARM; but another entirely to go from Bitcode to x86 and ARM. Currently, developers have to ship binaries compiled for multiple architectures, which increases app sizes. I suspect Apple is just building a workflow that creates a device-specific version of each app, and having developers compile to Bitcode simplifies app submission.