I understand that the answer is "yes - but...", and I'm just trying to get some sense of what I won't be able to do with Express Edition (relating directly to Sharepoint development).
I haven't found much on the web about this, and I'm guessing that's to be taken as a sign that it's probably not recommended.
If the Wikipedia article is to be believed then there are a couple of problems.
No debugging of running processes (e.g. ASP.NET)
The ability to attach the debugger to an already-running process has also been removed...
In order to debug SharePoint code, you need to attach the debugger to the 'already running process' w3wp.exe (the ASP.NET worker process). With this feature removed you would need to find a workaround such as trace calls or logging. It's a lot more inconvenient.
No integration with third party tools
Microsoft "made a business decision to not allow 3rd party extensibility in Express".
This also rules out the integration of very useful and helpful add-ins such as WSPBuilder into Visual Studio. These tools make SharePoint development and deployment much easier. (Note that it is possible to run the actual WSPBuilder tool from the command line but you miss out on helpful features for debugging/deployment and templates for new SharePoint items.)
To summarise: It's probably possible but SharePoint development can at times be difficult enough. With these features removed it will be much more difficult.