As far as I know, Yes. SPS and WSS uses the Windows Messaging service / .NET Passport. And If I am not misstaken you have to use the same email address as the one you have listed in SharePoint (I read that somewhere, have not tested it myself though).
If there is a way to actually host an Windows messaging service, server then I would think it is possible. I know that in our company that is being looked into. We have a policy that you are not allowed to use those public services, so we would also want to host such a service internally. If I get any more info I will post it here.
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