Is it valid, to use std::string to hold binary data, to avoid manual dynamic memory management

Yes, you can store any sequence of char in a std::string. That includes any binary data.

Yes. std::string can hold any char value ('\0' has no special meaning). However I wouldn't be surprised finding some C++ functions (e.g. from external libraries) having problems with strings with embedded NULs.

Anyway I don't understand what you are going to gain with an std::string instead of std::vector<unsigned char> that would make your intentions more clear and that offers more guarantees (e.g. that all the bytes are in contiguous not-shared memory so that you can pass &x[0] to someone expecting a plain buffer for direct access).