Sure. But you remove the benefit of syncing small diffs; you pretty much have to sync the entire truecrypt volume.
My (former) home network backup solution had a truecrypt volume created locally, and rsync'ed to my offsite backup provider (rsync.net). It did not have to send the entire volume for small diffs; in my experience, Truecrypt keeps local changes local in the volume.
That's a good point; thanks. I'm not sure if Dropbox diffs at sub-file level - perhaps it does.
The short story is that Dropbox + Truecrypt work fine, but may not (or may!) be optimal.
I use encfs with Dropbox because each file is encrypted separately, rather than a single monolithic container.
Possible, but inconvenient because the whole volume will get synchronized every time you modify a file.