A hookup turned into an almost year long relationship for me- that only ended because he transferred schools. It may not happen often- but it can happen. I know a few other people who have turned hookups into relationships.
Of course! I once hooked up with a guy for a week straight on a vacation and thought I would never see him again. As soon as we got home (to the same city) we started dating. It was a great relationship.
It completely depends on the people who are hooking up Plenty of "traditional" relationships begin because of physical attraction and then become stabilized by other aspects-- shared interests, mental attraction, etc. I feel like hookups that turn into something more aren't that different; it's just that the expectation of relationship-ness isn't there at the beginning.