Sure. http://mediawombat.com does that very thing. The website is stored on a hosted machine somewhere in Florida and the actual media is stored on Amazon's S3 and loaded via the browser on demand.
> Possibly use a shared deluxe to host site on 1.2TB bandwidth a month, then all the storage and streaming of audio files from S3.
If you mean some kind of shared hosting, I would strongly advice against it. If you are looking at 50k - 100k users a month, you would need good amount of RAM and CPU to do stuff like re-encoding mp3 files (you will have to do this as flash does not support many kinds of mp3 files)
There is other stuff too .. atleast go for a VPS. We are hosted on one and the experience has been brilliant so far.
