Is it possible to use .NET reflector (or an other tool) to modify & recompile the code quickly (i.e. without dumping the source and then use VS to recompile it)?
Yes( to the is it possible to do it quick-part). There are tools in the Visual Studio Command ( Not the IDE ) that allows you to re-compile code quickly.
Reflector cannot do this, but other tools can decompile .net assemblies, for example FileDisassembler.
You can probably use the Reflexil add-in for Reflector to do that:
Reflexil is an assembly editor and runs as a plug-in for Reflector. Using Mono.Cecil, Reflexil is able to manipulate IL code and save the modified assemblies to disk. Reflexil also supports 'on the fly' C# and VB.NET code injection.
Yes, as Filip says there are command line tools such csc.exe (for compiling C# code) but you would still need to dump the source from reflector to a physical file and then edit it using the editor of your choice (such as Notepad++ or simply notepad (why?)). these tools can become quite intense when used for large projects but allow you to things such as multi-file assemblies (which you cant do through the IDE). if your using C# then the first few chapters CLR via C# is a good start to using the command line tools.