Yes it is possible and in fact ist has happened. Another great Android Modder has successfully overclocked the 528MHZ on the MT3g and the G1 to 780MHZ.
Eugene373 has done it again, this time he successfully managed to overclock the MT3G and G1 to 780MHZ. This is insane given the fact that the processor was only rated at 528MHZ max. There has even been reports of them running at 1GHZ, this is Nexus One speeds! As usual, try this at your own risk, this does void your warranty and may kill your phone. The only person responsible for that will be you. With that being said enjoy and ther will be more to come.
[via eugenge373 twitter