Yes it is possible. It is called ad-hoc networking. One system acts as the host and broadcasts an SID that is invisible. The person who wants to connect needs to know the SID and password (if one was set). While doing this, both parties cannot get wireless internet connection and must use wired for internet access.
Yes you can. You configure your networks so that your home wireless network is first priority. When it is out of range, you can set the adhoc as second priority.