You can ride in Hong Kong just riding on Hong Kong Island is probably a death wish. The island is basically a giant hill and whats not hilly is reclaimed and filled with stores/offices/people. I think in Wang Chai and Causeway Bay you could still ride a ton and out in the New Territories I hear there are lots of nice trails but commuting on a bike seems basically unheard of.

The pollution is bad but not nearly as bad as Beijing or Shanghai. There you can't even see the sun if its a clear day there is another secondary "smog cloud" layer that is one of the most frightening things I've ever experienced. How the atheletes are going to deal with the pollution levels for the olympics will be really interesting to see. I would seriously doubt that any endurance world records are going to be broken considering the air quality.