Loose coupling is indeed the recommended way to go, which means you will end up with huge, boring to write, painful to maintain converters in your business logic. Yes, they belong in the business logic: the layer between the DAOs and the views. So the business layer will end up depending on both the DAO DTOs and the view DTOs. And will be full of Converter classes, diluting your view of the actual business logic...
If you can get away with having immutable view DTOs, that's great. A library you use for serializing them might require them to have setters though. Or you might find them easier to build if they have setters.
I have gotten away just fine with using the same DTO classes for both the views and the DAOs. It is bad, but honestly, I did not have the feeling that the system was more decoupled otherwise, since business logic, the most essential part, has to depend on everything anyway. This tight coupling provided for great conciseness, and made it easier to sync the view and DAO layers. I could still have things specific just to one of the layers and not seen in the other by using composition.
Finally, regarding exceptions. It is a responsibility of the outermost layer, the view layer (the Controllers if you are using Spring) to catch errors propagated from the inner layers be it using exceptions, be it using special DTO fields. Then this outermost layer needs to decide if to inform the client of the error, and how. The fact is that down to the innermost layer, you need to distinguish between the different types of errors that the outermost layer will need to handle. For example if something happens in the DAO layer, and the view layer needs to know if to return 400 or 500, the DAO layer will need to provide the view layer with the information needed to decide which one to use, and this information will need to pass through all intermediary levels, who should be able to add their own errors and error types. Propagating an IOException or SQLException to the outermost layer is not enough, the inner layer needs to also tell the outer layer if this is an expected error or not. Sad but true.
