I think it's very possible, but difficult, naturally. But, would PD really put it in the game, even if it was easily possible?
It depends on what kind of brake fade you're talking about. The kind of brake fade from using the breaks to long, in one particular stop. Or, the kind of brake fade when your breaks get to old, and worn. How about both?
Well, I see a problem with the firts type. Inorder to allow brake fade of this type, PD would have to make a lot of room in the brake touch sensitivity of the DS2 buttons for the fade to exist. When this type of brake fade occurs, it takes a lot more brake pressure to counter balance it. Unless you want to talk about total brake failure, which would be a stupid idea. This could make braking under normal conditions difficult. Now that most of us know, that it takes a lot more time to slow down a vehicle properly in GT4, and how you can enter a slide due to too much break pressure, I don't see how PD could actually make this kind of brake fade possible.
For the second type, I'll all for it, and it could easily be implemented into the game play. Purchasing new brakes every couple races, or between races, sounds like a fine idea to me. It makes the game a little more real. Just like how the oil change feature of GT3 made it feel more like a true car simulation.
Brake fade sounds like a interesting idea for GT4. But, if it doesn't happen, I wont cry about it.