The answer is yes. I'm doing it right now and it works great. It is also plenty powerful to run both the external 1680x1050 and the built-in 1280x800 screen at the same time.
You can buy a 1920 x 1200 27" monitor as well which will work fine. I personally like them as I find the same res on the 23" or 24" a little too hard to see things.