We've got a form that people submit that generates a detailed admin notification with survey responses. The admin has asked if we can set the "From:" address to the person submitting the form - basically an email field in the survey. She wants to be able to reply directly to the email to contact the submitter. I tried setting the Admin email to {email}, but that gives a validation error. Is there any other way to dynamically set it?

Not in 3.X without big developement.

You can :
1. Deactivate core admion notification
2. Create and send the email by yourself

Using www.limesurvey.org/manual/AfterSurveyComplete plugin event