Well, if you wrote a program that grabbed the mouse and processed all of the incoming X events, and then sent keyboard events to the appropriate application, it should be possible. It could get difficult if the program that was to receive the events was trying to get a "secure keyboard" and ignoring events, but otherwise should work. You would absolutely have to grab the mouse and not let it go for it to work, and you would probably want to disable the actual cursor too.

And I know you're trying to avoid lirc for some reason, but this really is the logical choice. I spent about $6 at Radio Shack and maybe 15 minutes soldering to make my IR receiver, and then maybe another 5 minutes programming it for each remote I wanted to use. You used words like 'complex' and 'expensive' but it seems that what you're trying to do is the more complex and expensive method of doing it. I could be wrong, though...

Either way, there's your answer.

Yeah, I don't think it would be easy. Mouse movements don't send out discreet "clicks" like keypresses do. It's more of a continual stream of small movement events.

I suggest you look into some kind of mouse gestures system, as was suggested at the beginning of this thread, perhaps defining the gestures to call the xdotool program to do the "clicking". I think that'd be the only reasonable way to handle what you want.