Yep. Piece of cake to do this. UMG has some good caution about the licensing differences and to be careful not to violate the agreement for using the Developer edition.
But on the technical side, I just did this about a week ago, if I can only remember exactly what I did. I remember just rerunning the installer (setup) from the Developer edition media and point it at your existing instance. Somewhere after specifying the existing instance, it'll ask you if you want to 'upgrade'. Upon choosing yes (including all related services like SSRS), it prompts for the key. I slapped in my dev edition key and it completed the upgrade. Checking my version showed the dev edition.
One of my employees needed to install R2 to do some development work but my only dev edition/MSDN license was on my own system, so I had him install the standard edition 6 month trial. Course, this was, um, 6 months ago. In the mean time, I bought another dev edition license (Amazon.com!) but didn't get around to reinstalling until the tools smacked him down one day last week.
Anyway, most of my trepidation was not wanting to point the installer at my instance, hoping for an earlier non-hosing option which would tell me if this path would even work in the first place. Once I ran through it as a last-ditch "I'm going to uninstall/reinstall next anyway" effort, I found that the installer handled it properly.