by Davo Smith.
Yes it should be possible to integrate etherpad into an assignment. It would probably take an experienced Moodle developer (preferably one who is also familiar with the etherpad API) about 3-5 days to develop a suitable submission type.
I would question how you would want it to work though, would each student submit an individual pad (in which case, you are not really using the collaborative nature of etherpad) or would it be more like the Moodle 2.4 team assignment?
Note, in case you aren't aware, there is already an etherpad activity available for Moodle.