There are several flavors of this question on Stackoverflow; to repeat the answer, yes, it's definitely possible.
Like much of .NET, resource providers are extendable.
I would argue that the built-in resource providers (that compile .resx to .resources) are an unfortunate mismatch for web-centric deployments.
If your settings are primarily strings, you can plug in a simple UpdatableResXResourceProvider that uses the built-in ResXResourceReader to read from existing *.resx files.
The results are cached in the application cache.
No assemblies are generated – updates are immediately read just as they would be with any other file-based CacheDependency – any number of updates can be applied at run-time.
The only caveat is that if you don’t want to disable built-in FCNs, you have to move the *.resx files to the shielded App_Data folder (trivially done with a post-build step).
You can download the UpdatableResXResourceProvider here:
http://www.onpreinit.com/2009/06/updatable-aspnet-resx-resource-provider.html