Hello,
Yes, the API can be used with PHP; it can even return the output in PHP format. For example, to log in: http://lists.wikimedia.org/pipermail/mediawiki-api/2007-October/000117.html (linked from http://www.mediawiki.org/wiki/API:Login#External_links). It can also be used internally by MediaWiki.
Yours cordially, Jesse Martin (Pathoschild)