Sure. When I modify a handle, I usually whittle, sand or grind it to shape it to my taste. All of my pocket Opinels get carved on some. There are several threads here on mods to Opinels. Plenty of people do it.
Sugru looks and feels like modeling clay when it comes out of its little envelopes. You can work it and shape it for quite a while, maybe half an hour or an hour, but then it sets up hard, like hard rubber. It is good for filling gaps, but also for adding shape or texture to a tool to make it more comfortable or work better. As an example, while using the stuff to repair a hammer handle where a chunk of wood had come out, I went ahead and added a finger hook for my little finger, not unlike what you find on the handle of a Mora 611, or a lot of other knives. Now that hammer will never fly out of my hand unless I want it to. Never had a knife that called for it, though.
I have used Sugru to add some little bumps around the head of a big Maglite flashlight to keep it from rolling off the table. Don’t even ask why that one occurred to me.
A guy could use the stuff to fabricate some handle scales, or a handle for a rattail tang, but I haven’t thought of one that I would find attractive. That is probably a failure of imagination on my part. I would love to show you some of the stuff I have done, not that it is particularly cool, but to give you an idea of what you could do with it. Unfortunately, this site is rejecting most of my photos at the moment.