Why not? The unit of measure should be 0.25m3 instead of 1m3. The distance between (0x,0y,0z) and (0x,0y,4z) would be 4*0.25m, or 1m. If you want the user to think in terms of meters just do the conversion in the UI code.
The trade off compared to a flat array is the smaller footprint. Any given world will be broken up into regions. That puts an upper limit on the depth of the octree.
Minecraft regions are 512x512x256 m. 2048x2048x2048 0.25m3 will have depth=11.
~Max