Creative Memories and some other places do monogramming on the covers for you. I don't see why you couldn't do what you want on the cover, though. I would think the disadvantages are the need to dust (ugh) and the possibility of damaging your cover decorations as you move the book around. You would need a good adhesive.
I agree on a good adhesive and I would limit the embellies since the book will be moved around, touched by many and so on. I've seen lots of books covered and they all look really nice...just keep things as flat as possible, just my opinion.
Good Luck and happy scrapping!
For my wedding album it had a square cutout in the center for a picture. Around the cutout I put embellishments of stickers that said love, marriage, our life together. On the left and right sides of the album I hot glued on lace and made bows out of ribbon to place in the center of each lace side that were the colors of my wedding. If you want me to, I can take a picture and post it later. Just let me know if you would like to see it.
I have used ribbon and flowers to decorate some of my albums. Just make sure you use a strong adhesive so it doesn't fall off. For a baby book I added ribbon along the spine of the album (6x6 size) and it was adorable-a lot of work but very cute.