Well yes they could, they could do anything to you, its their servers and their line so their teh 1337 haxzorz. But most ISP dont give a sh!t about it, theres sh!tloads of programs that rely on SMTP's most just say to use your ISP.
Many hacking forums and IRC networks I read up on all just use their ISP's, and im sure what they use it for is alot worse.
But yes it's possible, you can ethier take the risk, or read up on your ISP's policy, itll be on their site somewhere in the e-mail section im sure.