It would be great to add a firmware upload feature to Repetier Server. Very useful with remote printers on Raspberry for example.
I was also thinking about this. The biggest problem will be explaining where to get the hex file from. Except this, it should be possible if we define the right avrdude parameter.
Almost every parameter are in EEPROM, perhaps you can make hex file downloadable from your website ?
Another (a bit more complicated) way would be to edit configuration.h within Repetier Server interface and press a "compile and upload" button.
The most important things are not in eeprom, namely board, pins, display, language. So still millions of combinations. But hex files are nice for printer vendors who only need to put the hex on their website.
I guess I would keep it simple and require a hex file and user has to see where to get it. Compiling can get complicated easily for untypical things like no arduino firmware, teensy or sanguino, ...
But if I'm in a good mood I might describe how to find the hex file after compilation :-)