I'm not sure if it would be possible to use a Bluetooth OBDII interface due to the DROID's limited Bluetooth profiles, but it should certainly be possible to use a WiFi OBDII interface (like this one).
In fact, look what it says at the very bottom of their page:
It looks like they may have an Android application planned.
You simply can't do it without an OBDII device, and a WiFi-based one would be by far the easiest (and probably cheapest) way to do it. If your idea is to connect an OBDII device directly to the phone's USB connection, then you're going to need some sort of customized OBDII device, and an application which requires ROOT access (if such a method is even possible).I am more looking for an application on the phone that would read the codes directly from the car's computer, via a simple cable and will report RPM, coolant temps etc. I am not looking for an intermediate device or anything...
On OBDII cars you can cycle the key to give you the code, And making a app. to tell what the code stands for is not unreasonable. Although I agree hooking the phone directly to port is.