It's possible. However, the hadith makes that interpretation much less likely.
"عن أبي ذر قال كنت رديف رسول الله صلى الله عليه وسلم وهو على حمار والشمس عند غروبها فقال هل تدري أين تغرب هذه قلت الله ورسوله أعلم قال فإنها تغرب في عين حامية تنطلق حتى تخر لربها عز وجل ساجدة تحت العرش فإذا حان خروجها أذن الله لها فتخرج فتطلع فإذا أراد أن يطلعها حيث تغرب حبسها فتقول يا رب إن مسيري بعيد فيقول لها اطلعي من حيث غبت فذلك حين لا ينفع نفسا إيمانها
الراوي: أبو ذر الغفاري - خلاصة الدرجة: إسناده صحيح على شرط مسلم - المحدث: الألباني - المصدر: السلسلة الصحيحة - الصفحة أو الرقم: 5/528 "
It makes it very clear that it is an actual place where the sun sets.
Here's a translation of a shorter version of this hadith:
Abu Dahrr was with Muhammad during the sunset. Muhammad asked him:" Do you know O Abu Dharr where this sets?" He answered:" God and His apostle know better." Muhammad said:" It sets in a spring of slimy water."
Also, I like HappyMurtad's take on this:
Personally, I do believe that Muhammad meant that the sun was setting in a fetid spring. Of course, Muslims would never accept that. The following verses about Thul Qarnain reaching “the rising place of the sun” are even more telling to me. “He found it rising upon a people for whom we did not provide any shield against it.” If the Qur’an is not talking about a physical place from which the sun actually rose, then why the hell would the people there need a “shield” against it? It would just be like every other place on earth that experiences sunrise and does not require any special precautions. It’s clear to me that Muhammad meant to describe a people who were living at the place where the sun rose.