Yes, you can use any cache hierarchy you like for the DDC.
See:
; Derived Data backend graphs
; Each of the below backend graph sections contains a set of nodes used to create derived data backed graph.
; DerivedDataBackendGraph is the default graph and the other can be specified in the command line using:
In the BaseEngine.ini file. I beleive you will normally be using RocketDerivedDataBackendGraph, but the other ones have useful examples.
You can delete the DDC. You will have to rebuild some assets if you do. Migrations of DDCs is also possible with some clever cache hierarchies. For example, DerivedDataBackendGraph migrates from AltShared to Shared.