Hello Aneel,
You can do both the points through a custom module only. X-Cart 5 has no such settings/services that you need.
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this has to be achieved in a way that as soon as the country changes, the service/API is called and based on its response the checkout fields against that country are shown in the checkout page along with a different validation rules
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The checkout page is made of separate widgets and it is possible to trigger an AJAX widget reload through JavaScript. So, you may use the same technique that is used to reload the widget with shipping methods upon changing address fields. I'm not sure if I can name you exact files as there are many files used in that process.
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[I want to keep the shipping/payment/review section hidden until the shipping/billing address fields are completely validated
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You may do this by assigning a CSS class to the container HTML tag and adding CSS that hides the sections if the container doesn't have the class.
Or you can go deeper and do the changes on the template level.
The base widget that renders the checkout pane is \XLite\View\Checkout