I have traveled and photographed in Costa Rica, Panama, Brazil and Argentina over the past ten years, with a LOT of time in Brazil.
The first question i would ask concerns film versus digital. What do you hope to accomplish in this journey? If you merely need to compile a record of your travels, for personal use, or maybe to self-publish a blurb book or somesuch, i guess the film/digital debate is moot. Take whichever you think will most reliably deliver the results you need. But, factor in the need to carry lots of film and then to protect it during any air travel. With that, you'll need to be able to effectively communicate to security agents that you don't want your film X-rayed, and that is becoming increasingly more difficult. During my last trips, in August and November, agents kept repeating that "it's okay if your film is rated under ISO 1600." In Spanish or Portuguese, of course. But, i've never trusted that line, and my paranoia includes concern about the cumulative effects of x-rays. Almost no flights from the US are non-stop these days, so figuring two flights down and two back, and then maybe not using some of the film and taking those rolls again the next trip.... Whatever. I have always been successful with getting hand-inspection, but it is a pain in the ass.
But, i prefer film. The aesthetics of it, and also because i have a prejudice against digital images for the type of photography i most 'respect.' Essentially, i wouldn't want to buy a 'fine art' print that was shot on a digital camera, and so i don't want to create a fine art print shot on one. That's my bias. But, i still shoot digital. Just about to get a 5DII and i recently took an LX3 to Brazil. But, i use those cameras for specific purposes.
The Hexar AF is a very nice camera. I had one for a little while. But, i wouldn't want it to be my ONLY or primary camera. The lens is great, but it is an AF camera where you cannot verify that the AF is accurate because you don't see the focus in the lens. As well, the fast shutter speed is VERY limited for the environment in which you'll be traveling. If you don't mind having to stop down a lot in daylight, i guess it's fine. But, as you said you'll be shooting people, maybe you'll want to isolate the subject from background a little bit, and a 35mm lens at f11 because you're shooting in Brazil on the beach is not going to get you there. If you do decide on the Hexar AF, i'd also take a small, simple SLR, just in case.
The LX3 is a nice camera, but it has a lot of 'features.' If you're going to get one, get it early and get used to it. I got mine in early November, and i still don't know what's going on with it. I mean, i can use it, but i'm not really intimately familiar with it. In any case, i use it for casual things, and i would not want to use it as a primary camera.
Get some Pimsleur language CDs and learn Spanish first, and then some Portuguese. Almost no one you will encounter on a practical basis will speak English. I'm talking about cab drivers, waiters, clerks/cashiers, bus drivers, etc. Carrying a phrase book is going to be both cumbersome and annoying for locals. And, it marks you as a target very easily. Don't be THAT guy.
Brazil is dangerous. But, if you are a conscientious traveler, you shouldn't have any trouble. Know where you can go and where you can't, and what you can show and what you can't. Do NOT carry around any kind of bag that looks like a camera bag. Don't wear your camera on a strap around your neck or shoulder. If you do keep a strap on a camera for whatever purpose, consider wrapping some ratty duct tape around the ends, and/or putting a piece on your camera to make it look like a thrift store special (if your personal appearance doesn't make you physically 'imposing'). That doesn't mean you can't take a camera. Whenever i travel, i take 6 or more cameras, including Hasselblad, Leica, Canon, etc. But, i carry only one at a time, in the same type of bag i carry my beach towel in - not a camera bag. I pull it out to use it, and put it back, in a padded camera insert. On the occasion that i'm carrying a camera around and just walking around looking for a shot, i carry a small SLR or rangefinder (or Contax T3, Leica CM, or the LX3) in my hand, with strap wrapped around my wrist, and whenever i see 'street kids' aimlessly walking around, i shield it, and make eye contact to show that i know that they're there and also to show that i'm not intimidated by them. Maybe the last bit is silly or the wrong approach, but after 25 visits, and 2 months per year for ten years, you learn how YOU can best deal with people and situations. But, i'm 6'3", black, and probably look athletic, so any thieves might assume that i could chase them down. And, possibly (probably) being black gives a thief the impression that i wouldn't have anything of value anyway....
Back to film / digital.... Whichever you decide, decide now. If you choose something you're not familiar with, get it now and work with it until you leave in March, so you can get to grips with it and feel confident and comfortable. And/or so that you can change your mind, sell the item(s) and fall back to plan B. A lot will depend on how much you can pack and carry. You seem to be more interested in a more 'reportage' way of seeing the world, so i don't recommend a big zoom lens. As you suggested, a prime or two and a small body are a great way of working. Considering where i've been, i'd suggest a 24 or 28mm + 50mm, or a 35 and maybe a small 85? A Contax Aria would be a great choice, if you go with film. If you choose a dSLR, the equivalent focal lengths. Did you say you're taking a laptop? Get a small card reader to plug in for quicker dumps, and burn DVDs. Review images on the laptop every night to make sure you're getting the results you want. Shoot RAW and have enough memory cards to deal with your shooting volume along with the dump/backup schedule you can practically maintain.
For such a long trip, i would suggest you choose one primary camera, and have a backup that uses the same lenses/technology, and THEN a supplementary camera like an LX3 or Hexar AF. Take ziplock bags to keep your stuff dry.
Regarding destinations: Brazil is amazing. Rio, in particular, but you're lucky if you can also travel to other cities. Buzios is supposed to be fantastic, for example. But, don't overestimate Buenos Aires. It's a 'nice city,' for certain. But, it's often referred to as the "Paris of South America." It's not. It's like Montreal is the Paris of North America. Just a silly cliche. Buenos Aires is not an exceptionally photogenic city. In fact, when i was there, i looked for postcards to send to family back home. Couldn't find a single postcard with an interesting image on it. There just isn't that much that is very interesting to shoot/look at there. My humble/limited opinion, of course. I'm not suggesting you avoid it. Just that you don't overcommit too much time to it.
If i can answer any specific questions, don't hesitate to send me an email.