Probably not using stock Arduino code, has you will need to play around with the timers, but yes an ATmega has more than enought grunt, almost all cheap 30A ESC's use an Atmega8 running the show, albeit all the code being done in assembly, there is lots of firmware for those, to allow them to speak i2c instead of the silly PPM RC when using them in quad's and other multi-rotor flying machines.
There is also AfroTech mods ESC that you can find all the information, source, schematic, even gerbers.