Yes its possible. As a matter of fact, LiveCycle ES Server ( along with its associated modules) facilitates the merging of the XML with a LiveCycle template.
In the use case you have mentioned, you can leverage the LiveCycle server to merge the XML data with the PDF, generate a dynamic PDF, Reader extended it and render it to a client. The dropdowns will have the updated data as well.
Please let me know if you have any other questions.
Thanks, Armaghan.