can I set the default GW to be the Link Local address of the next hop router. I understand this is a strange thing to do, I'm mostly wondering it is possible?

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Yes, you can. I've done it without even knowing it, and it worked. Apple AirPort Extreme 802.11n Base Stations actually routinely advertise their LAN-side IPv6 link-local address via IPv6 Router Advertisement, and my clients use it and successfully reach v6-only sites like http://ipv6.google.com/ and the non-mosaic dancing kame at http://www.kame.net/. I didn't even notice that they were using the base station's IPv6 LL address for their default IPv6 gateway until much later.

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It's perfectly valid. I use radvd on Linux to advertise my IPv6 subnet to my LAN, with a very basic config, and it actually advertises the router's link-local address by default. Never had problems with it.

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