Can a halfling with monkey grip dualwield longswords?

Yes, you can do this. Mind you, it's a pretty terrible fighting style so I wouldn't recommend it.

any weapon size of medium will work, the general 1d8 category of flails, longswords, battleaxes, warhammers, etc.

What ever floats your boat baby, dual weld longswords if you have fun doing it. Keep in mind that in much of the NWN games your weapon bonus's are what cause the major damage with your weapon (adding in acid, holy, etc damage) and the minute 1-2 extra damage a longsword your Halfling is dual welding (1-8) compared to a lighter weapon (1d6) isn't really that much, especially if each weapon has like 1-6 extra acid damage, +5 enchantment, 2d6 holy damage, etc.

You might decide saving that feat (monkey grip) for something else, and the to-hit penalties isn't worth that extra 1-2 damage per weapon when you might just pick up a better feat instead and not lose a little to-hit. Like the other poster said, roleplaying only really I wouldn't even consider such a build with the minimal damage increase.

With human sized foes using large weapons monkey grip, there is a slightly bigger damage boost like say 1-8 to 1-12, or 2d6, etc. This boost is much smaller with a small character using mokey grip on medium weapons.

The attack penalties will be ridiculous even with all the DW feats. But if you like staring at an animation that only will hit on a natural 20 against challenging foes, go for it. In PvP, you'll die quickly so will be spared most of the pain.

As above. Really terrible idea.

The base damage of the weapon itself is pretty much inconsequential in NWN2.

When dual wielding, even as a human, I usually prefer Kukris. Least penalties and best critical chance.