Is it possible to sort an arcpy.da.UpdateCursor()?

The sort completely exhausts the cursor before you go into updateRow. The way that cursors work is that the updateRow call doesn't work on arbitrary rows out-of-seqence, but on the current one being iterated over. That is, you can only operate on one row at a time.

You may want to look into doing this on the geodatabase side instead. You can specify an ORDER BY clause and sort it before you get to it instead.

As @nmpeterson pointed out, you can input an sql clause into the cursor call to sort by a field:

UpdateCursor (in_table, field_names, {where_clause}, {spatial_reference}, {explode_to_points}, {sql_clause})

SQL prefix supports None, DISTINCT, and TOP. SQL postfix supports None, ORDER BY, and GROUP BY.

sql_clause=(None, 'ORDER BY SORT_FIELD ASC') -- or DESC

info comes from the ESRI help: http://resources.arcgis.com/en/help/main/10.2/index.html#//018w00000014000000