It certainly can and it is not such a difficult thing to do. The problem is, however, that MS Outlook uses the format of the incoming message as the reply default (you cannot change that), so you need to change to the plain text mode each time you reply to an incoming html formatted message. And when you do this, the blue line that marks the original message disappears and is NOT replaced with the ">" characters that plain text emailers insert. For that reason, it is diffciult to distinguish between th eoriginal message and the reply - you have to insert some sort of marker by hand. What is more, the original message is on the bottom of the reply message, which seems counterintuitive to me.
PS. Talking about kitsch. I've seen people going beserk with html formatting, sending you all kinds of cutsey embellishments. The invention of the computer seems to be a major boost in the production and reproduction of kitsch.
Wojtek