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Yes, you can do this with the pallets. We built one of our coops with them and would do it again if we came across a good deal. We used the pallets as walls, and then used plywood or OSB as the sheathing on the outside to give it some shear strength and to hold it all together. We also used them as our roof structure, and again, covered them with ply and then roofing paper with shingles on top.
Here's a great website showing all kinds of pallet sheds, buildings, etc. Keep scrolling down to see them all: http://summerville-novascotia.com/PalletShed/
Also do a search here on Pallet Coops and you will find a lot of discussions on them.
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