Is it at all possible to use craft stamps to decorate a cake?

Yes it is, I use them on fondant all the time. BUT keep them just for food!!!!! In my pics is a 3 tier cake with roses and I used a stamp to make the plaque. Good luck and have FUN.

Yes it is I haven't used them a lot but I have a VERY tiny butterfly one a have used a few times with fondant. As seen in the picture at the link below. I have also seen many other people use them.

http://cakecentral.com/modules.php?name=gallery&file=displayimage&pid=1647989

Yes it is..some are better than other ones..
Edna