Possible to get feed to return latest updated posts rather than latest published?

Try this (not tested) add to your functions.php of active Theme

function wpse49312_alter_the_query( $request ) {
    $dummy_query = new WP_Query();
    $dummy_query->parse_query( $request );

    if ( $dummy_query->is_feed() )
        $request['orderby'] = 'modified';

    return $request;
}
add_filter( 'request', 'wpse49312_alter_the_query' );

From Alternative to query_posts for main loop?