HYDRA - When an adjacent friendly character makes a range attack, modify the target’s defense -1 if the target is within line of fire of this character.

My question is if a character that has either the hydra or police team abilities
Can use improved targeting does that improved targeting work for line of fire for the team ability.

Yes, Improved Targeting affects any character's power or ability that requires it to target another figure. So if my Doomsday has Improved Targeting and he's the one using Outwit via the Superman Enemy Team Ability Doomsday's use of outwit ignores whatever his Improved Targeting say it does

Awesome thank you.

What is the source of ?
is it from a printed on the dial, or is it part of a special power?

Sharpshooter has been done away with in the current modern format outside of certain pieces who have it has a trait.
And I didn’t play enough back when it was around to know if it acted like improved targeting or not.
I’m just talking about the figures that have the IT on the character card.

I did not mean "sharpshooter" I meant IT.

If IT os coming from some other source than "", then it may require type of trigger, like an action being given. If so then the character with PD/Hydra, would not be able to use their IT.

Assuming that in the given situation the Hydra/Police character is actively able to use the IT, then they would be able to use IT:Elevated/Hindering/Blocking/Characters while using the TA. The only one they couldn't use is IT:Destroys Blocking, as that only works during an attack for the attacker.
(Though I guess the way it's worded, one could try to argue that they are attempting to use that IT during a range attack, which would be crazy how much blocking you could destroy in one round that way, but I wouldn't suppose most judges would allow it!)

I prefer when you use your powers for good, not evil.

Yeah, it's not something I would try to argue for, but I can imagine some might try, at least, now that I went and put that idea in their head!

Would this also work for probability control? (If the judge allows it at all)

Those would be some seriously trigger happy police (or Hydra agents).

If a judge allowed this, then there isn't really any reason you even need PC. You could just draw a line of fire (no range limit!) through a piece of blocking terrain and destroy that piece of blocking terrain every time anybody made a range attack.

If your judge allows this, that is very sad.

Aside from the whole IT:Destroys Blocking thing...Yes, all the other ITs function passively and apply any time you are trying to draw LOF regardless of whether you are attacking, or even regardless of who the active player is.
(The whole IT:Destroys Blocking thing was really meant to illustrate something that you "can't" do and judges should not allow it, even though some may try to argue it. Everything else is pretty straight forward and if a judge didn't allow it, then I'd have an issue with that judge/venue.)