Yes, you can change the setting but we've been thinking about changing that. When you change, Fuelly does its best to find a series of odometer readings vs. tripometer readings, but there are some confusing quirks here and there if you switch back and forth a lot. So we're considering making it a one-time change, or simply not allowing the change. (You can always create a new car and use import/export to move data if you need to switch methods of tracking.)
So the answer is yes right now, just be aware that lots of switching back and forth could cause problems. A one-time change should be fine, but the cleanest way to change is to start a new vehicle with the new method of tracking.