It's definitely possible. And there are a few plugins to help make it easier

**[Diamon Multisite Widgets][1]**

>Bloglist, recent posts and comments from the whole network.

**[Wordpress MU Sitewide Tags][2]**

> A central area where all the posts on a WordPress MU or WordPress MS site can be collected.

> This plugin creates a new blog on your server for all the posts on your site, much like http://wordpress.com/tags/


  [1]: http://wordpress.org/extend/plugins/diamond-multisite-widgets/
  [2]: http://wordpress.org/extend/plugins/wordpress-mu-sitewide-tags/