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Basically doing what the coarse location provider does anyways, which is corollate visible APs on the device with a db of mapped APs.

Yes, it's possible, but constantly scanning for APs will have the side effect of an app draining battery even faster than if it used the phone's location service.

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During the Android setup process it asks you if you want to enable this feature and has a side note that these scans are specifically to save battery life because they take much less energy than typical location services.

Yes, wifi scan location takes less power than GPS location. Rolling your own wifi location service in an app will take more power than the framework's service, however, and it will almost certainly be less optimized.

I'm sure there are tricks against battery consumption - for example - scan only when user stops driving. And when user walking scan rarely. Or maybe use Gyro/Accelerometer to estimate where the user walked.

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