Yes you can use an external USB DVD drive. To 'transform' a DVD drive from external to internal would require a USB Drive Enclosure and the cost of both makes no sense. 'Maybe' the USB DVD drive can be dismantled to reveal a SATA DVD - but again a waste.
You can install Windows, Drivers, Apps, BIOS flash, etc off a USB Flash Drive. Also, you can 'image' a DVD ROM to a Flash Drive if needed. I build rigs off USB Flash Drives all of the time