Real-time code can dynamically allocate memory, it just has to be more careful about it.
In real hard real-time the dynamic memory handling will just become another of those factors which have to be taken into account when working-out whether the system can do what it has to in the time allotted. Hard is worst-case.
In soft real-time it is usually enough to check that the dynamic memory handling will not take to too much time and result in too long pauses. Soft is average case.
The erlang system just quite a good job for soft real-time apps, the dynamic memory handling is reasonably efficient and normally does not cause any noticeable pauses. And while it will probably introduce some non-determinism this in itself shouldn't you any problems. I mean that if time is important to you then you should anyway be timing the app, for example so that the audio samples "arrive" on time.
It is a completely different question if erlang is the right language for your app. One thing that has not been really optimised is numeric calculations. Erlang can of course do them but it has nowhere the speed of low-level languages. They have generally not been critical to the types of apps for which erlang has been used. But then again there is Wings 3D, an open source subdivision modeler inspired by Nendo and Mirai from Izware, which is written in erlang. So all is not hopeless. :-)
Really the only way to find out is to write a small test and try it out. Another question is what James mentioned, which type of language would you prefer to use?
