I wonder, if you take a blackpowder receiver, replace the barrel to that of a modern gun, and matching bolt for that caliber, is it safe or is it a sure way of blowing yourself up? If it can technically be done is it legal? I thought I heard someone say that there was business devoted to converting blackpowder guns to smokeless long time ago...

Somewhat. I see this done alot with BP Revolvers. In fact, the guy I sold my BP Revolver to said that is what he does for a living. I don't think a new barrel is needed. My current bore was .375 a .38 special bore is .379. That difference is .004"

All you would have to do is make the barrel slightly larger, then add a point to the current hammer. There are kits out there. If it is a .44 or some other common caliber, no barrel alterations may be needed. The kits usually include a New hammer for centerfire ammo. and a new cylinder.

Firearms designed to shoot black powder can't handle the high pressure of modern smokeless powder ammunition. Current factory loads for antique firearms that originally fired cartridges loaded with black powder are loaded to match the pressures of the original black powder loads so that you don't blow up your antique 1886 Winchester in .45-70 or whatever your shooting. You can buy hot loads for these calibers but they are only meant to be fired in modern firearms that can handle the pressures. The reproductions of antique firearms that are being marketed to the cowboy action shooters are not designed for hot loads. If your talking about converting a muzzle loader to fire metal case cartridges I'd say it's probably legal but not worth the trouble. If your talking about shooting smokeless powder ammunition in an old Colt peace maker or some other antique I'd say stick to the low power factory loads. "Traditions" makes cartrdge conversion reproductions of cap and ball Colt revolvers which were popular after the Civil War but these are from the factory conversions designed to shoot metal case cartridges.