It's totally possible. the devs just need to be able to think of proper scaling and selecting the "right" superman to use.
Let's face it, there are probably easily dozens of versions of the mordern superman they can run with. Just got to make sure they stick with one where the author didn't give him too man stupid powers and they'll have a decent base material to work with.
Even given that though, Superman has always been treated as someone with larger than life powers. And that, really, should be how this is handled.
Instead of making him say, fight criminals with pistols, he's fighting doomsday, he's fighting Captain Marvel, he's fighting Lex Luthor in his kryptonite armor, he's fighting Mongul, or he's fighting Darkseid. Seriously, make the threats at a cosmic level, and it can work. With this, you can still give him a normal health bar, and nobody would bat an eye when he looses a huge chunk from getting hammer fisted by Doomsday.
And when it comes to more convention threats like say, a cruise missile, just set it so that said missile might do only small bit of damage, but is capable of doing what is basically a 1/6 second hit-stun by knocking him off his trail a little. This way, you can even still do more traditional encounters.
As for minor criminals? meh, just let the player plow through them if he wants. I mean, they're playing superman here. They need to have some moments where they can enjoy being invincible.
The physics engine will also be of paramount importance too, since we're talking about destructable environments here.
Powers and how to handle them: The core powers that superman has, flight, super strength, heat vision, super hearing, etc will all be on at all times. Basically, this is superman in his standard mode. Of course, each power will have a "powered up" version of it. This will consume a super meter (ba-dum-chh) that replenishes with time. The difference could be like, normally, a building will stop you in your flight path. But if you use your powered up flight mode, you can actually punch through buildings like a knife cutting through tofu. His normal heat vision can be used to for standard range attack, but his powered up one will actually just cut through obstacles and make them spontaneously combust. (and if we want ot make the game less PG, maybe actually burn people up)
And basically, while you can deal with most of the games obstacle without using it, the cosmic level threats like Darkseid you will be using it a LOT. (in fact, I dare say some of those threats I'd make it so that it's ONLY way you can deal damage to them) Conditions that prevents superman from absorbing yellow sun energy prevents the super meter from recovering. kryptonite will actively DRAIN the super meter.
For actual stages, this is easy. Between the death and return of superman, all the way to infinite crisis, there is more than enough material to throw around for a good supes game.
