Could this be possible. To use a tadem recumbent as a utility bike by simply removing the back seat and placing a basket inside? Also wouldn't a tadem recumbent make a almost perfect bicycle for hauling a toddler?

First question: Maybe, but it won't be easy. How would you attach a basket to the frame? You might have stability issues, and I think any basket would probably have to be fairly low and narrow. Anyhow, it seems like a difficult and very expensive way to make a utility bike. (A trailer would be easier and cheaper).

Second question: Doable yes, perfect I'm not so sure. If the child was too young to reach the pedals, those tiny legs would just be hanging in midair, and you would likely have to strap the kid down. Why not just mount a child bicycle seat on back of a single rider recumbent? I do see the appeal of being close to your child while riding, but again, a bike trailer comes to mind.

If I absolutely wanted a cargo bike and could afford it, I'd get one of these:
http://www.pedalpower.de/Lastenrad_Web/lastenfahrrad_longharry.html#