But yeah, making a facebook/twitter-style social network app that uses plain email as transport would be really cool.
Probably. On the server-side RSS is nicer in some respects - you're not sending out mail to old, disused inboxes, you don't have to manage subscriptions or worry about being blocked as spam etc.
One thing that I think might make email better is if people got used to the idea of "email apps". The idea that my inbox might collate stories from a given source into a scannable digest (like RSS might give me) seems like a strange departure from the traditional idea of what an email client or service is "meant to do" - present discrete, unmodified messages in the most transparent way possible.
For a social network it's clear that you'd need something like that, though - you'd need clever filters on your feed, thumbnails on images, possible integration with image-sharing services etc etc. Using email and mailing lists gives you a big head-start, but if you can't build on top of it then it can't take off like a dedicated protocol can.