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I am planning a simple video sharing module on a project where a user can upload a video on our module using his Dropbox and is able to show it through our module. I believe I can do using their API and in fact I guess some mobile apps do use Dropbox for sharing/accessing user files. So, is it possible?

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Yes, it is.

Setting folder access to publicly shared allows anyone to embed, access and view the content within, but keep in mind, Dropbox will throttle access if you link a 50MB video and you use an insane amount of bandwidth to stream it. The chunked_upload function may be of interest to you.

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