Is it possible to edit an existing mod?

With permission from the author of course. Can it be done? If so, how? Is it as simple as transferring across the mod files as you would when setting up a server?

Well you would need permission from the author purely because it cannot be done without the source, there are about 5 threads at least on this already.

If, for whatever reason, a dev gives you their source, then copying/moving it into the mods directory for your DevKit is all that needs to be done.

There will most likely be issues however, casts can and will probably break, links will probably randomly break also.