Can I simply replace the Bluesmirf modem with a USB Host Shield + USB Dongle on the arduino?
Yes, you can. As soon as you write the necessary code for the Arduino to talk to the USB dongle.
USB is a protocol that allows hardware to exchange data. The modem includes that hardware that makes the exchange of data possible, and the software to convert that data to serial data for the Arduino to read.
The dongle does not contain either the hardware or the software. The USB Host shield provides the hardware; you write the software.
Oh, and, no, it is NOT an easy task.
Spend the money and buy someone else's work.