I had thought, Hibernate was database independent; simply change the dialect and it can work with "any" database.
But these posts have left me thinking -
* these posts are pretty old (5 year old), so does the same still hold true?
* given these findings, I have a serious doubt - should or should-I-not adopt Hibernate, for my migration project; if not what ORM can I use?
I didn't go and read those posts because I assumed you were going to ask a direct question. So let me just say that yes, you do have to journal files on the IBM i if you want to access them via Hibernate. If they aren't journalled right now -- a likely situation for old systems -- then your first step is to start journalling them.
As for whether you should use Hibernate, that isn't a question that can be answered without a lot of inquiry into the background of the project. All we know is the environment you propose to run your application in. It is possible to use Hibernate on IBM i, I've seen it done and at any rate there wouldn't be an AS400Dialect if you couldn't.
However one of your mandates is to build a "modern" application. That implies that your database updates should use transactions, and that implies you'll have to journal the tables anyway.