AVRs are good replacement for Arduino, infact Arduino is AVR. And how are you going to dim an actual street light running on AC. PWM will not work here! And street lights helps us in viewing as far as we can so you should put sensors of the street light at least 200-300 m away. And in case if the street lights are on a long road this simple method will not work, then you should focus on networking aspect of these street lights. Frankly, although more electricity is wasted due to useless hours of street light there are far more problems with dimming and switching off street lights.