Yes I do believe that it is possible.
I've always had two main theories on which way they could go with multiplayer in The Elder Scrolls.
1. The most obvious of course, is the classic co-op gameplay, where you and a friend would be able to explore the game world and mess about, do quests together and generally run amok.
The gmae would likely require a tether system of some kind, keeping the two in the same general area so as not to put too much strain on the engine and the hardware.
2. My second idea is of a somewhat more linear style, much more along the lines of a D&D quest, where you and three or so friends could get together as a party and go on a set quest through a semi-open, but still linear world. One that creates the illusion of freedom.
If this was the way to go, you'd probably be able to transfer your SP character into the MP quest world with their equipment, weapons and their level, or with a set level, scaling their skills down accordingly based on what they were when they were that level in the regular game.
Personally, I'd prefer the second style over the first, as it seems much easier to do. You could have a bunch of set quests on disc (at least 20 or so) and have more quests avaliable for download later on, though considering the game's industry today, they'd probably just give you five quests on disc and either make you pay to download or unlock them, so this idea is ripe for abuse.