I agree with #3 and #4, but my background is in Sanskrit and Hindi (and scripts for related languages like Punjabi or Bengali). There were set rules for transliteration so that each phoneme in Devanagari (and related scripts) was represented by a unique Roman character, though accent marks were sometimes used for some sounds.
Translation, though, was a process of interpreting the syntax and semantics of a language so that it made sense in the language you are rewriting it in. For example, Hindi uses dative constructions. To express that you're sick, you'd say something like, "there is sickness to me." But this makes no sense in English, so when you translate you have to come up with a sentence that means something like the intention in the Hindi phrasing - for example, "I feel sick."
Transliteration to me seemed kind of like a straightforward change in the way the language is encoded. You could do it if you had your secret decoder ring. But translation is more of an art than a science, because there are not always (or even often) one-to-one analogs from one language to another, and it takes some creativity to find a phrase in one language that means what the other language is saying.
I agree with #3. When I learned Ancient Greek at school we had to start by transliterating Greek words from the Greek alphabet into the English alphabet. There was no translation, in terms of finding a definition of the words and phrases. Therefore, transliteration and translation based on my experience are very different.
This is not how I understand "transliteration." To me, transliteration is the process of taking words that are written in one writing system and putting them into a different writing system. In other words, this is the process of taking the Japanese word 日本 and writing it in Roman letters -- Nihon.
Using this definition of transliteration, there is really no similarity.
Translation and transliteration are very similar on the surface. If you dig a bit deeper the definitions provide slight variances that can be important in identifying their similarities. Translation, by definition, is the act of changing (or translating) something from one language to another. [i] Transliteration is a similar process, but usually a more technical and systematic definition of the process. A great resource for the definition and process of transliteration can be accessed through enotes. [ii] If you want more information on the translation process there is an interesting article that can be accessed [iii].