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If I was to signup with office 365 and their hosted sharepoint server, would I be able to create a sample project that could demonstrate to a potential employer that I have the skills?

i.e. I currently do contract work .net/mvc/etc, but I want to get into sharepoint but remain as a contractor. Realizing this, I need some sort of an example project to show that I can do this type of work

Any suggestions? Is this a good idea?

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Yes, You can.

You have to create a app using your development skills and deploy the App to store and from their you can give the demo.

SharePoint 2013 development overview

SharePoint 2013 Online App Development

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Yes, as Waqas mentioned you can create an APP and add it to a SharePoint store and then showcase it to your perspective clients. But that's just a small portion of what SharePoint can do. I used to do heavy C# SharePoint since 2007 but last two years its mostly JS and client side code. Its a big shift, and most work will be on a client side these days in office 365.

Thus i would suggest:

  1. Learn how to brand a sharepoint site, nothing turns off a client than OOB SP Site

  2. Create custom webpart/s that showcase your client side (JS) skills.

  3. Learn about provisioning and list creations. Content Types and possibly Document Sets.

  4. If you have a custom iis/azure server, create your own timer job/ or rest service and consume it from SharePoint.

Good luck.

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