Google's Dalvik VM is specifically designed for mobiles. Presumably a lot of the engineering trade-offs made in light of that would make Dalvik relatively weak on servers. So I'm not sure Dalvik would be a great starting point for Google to fork Java.

Having said that, Google are heavily reliant on the Java platform, so they must have at least considered how they can protect the platform if necessary. Could they fork OpenJDK? Or at least support a fork? They certainly have the resources to do it, and Oracle's early moves don't bode well for a cooperative solution, so I wouldn't be surprised. Perhaps they will use the current litigation as a test re: the possible patent issues, although by the time that is resolved it may be too late to make a move...