It is definitely feasible. Between boards or chassis where there may be a ground difference, the signals can be AC coupled.
Do you mean MDI? Yes, that works, just use pullup resistors and coupling caps, no transformers needed -- or just the one transformer for better isolation than capacitors. (To clarify, coupling capacitors alone, works for small ground-to-ground offsets: maybe fractional volts at AC, up to say tens of volts at DC. Whereas the transformer gives very low isolation capacitance, allowing much more freedom at both AC and DC.)
For MII, I don't know that it can be AC coupled?
Tim