Yes, P4 MAT files will work in P5, with a few caveats:

P5 has both ambient colour and ambient value channels; P4 only has ambient colour. P4 MATs that rely on ambient tricks will only set the colour, and not the strength, in P5. By default, Ambient_Value is 0 (off).

P4 MATs with bump maps will, in P5, automatically attach the bump file to the material's Gradient_Bump channel, rather than the regular bump channel.

Other than that, they work fairly well.

MAT Pose Edit 3 supposedly can create P5 MAT files, but I haven't tried that feature myself yet. I don't know if the MATs it generates include all the additional P5 channels.