To me, an installer's request that I please close everything and reboot is like my office supply store saying "Please clear everything off your desk to use your new legal pad." However, it turns out that it is possible to avoid reboots even after installing new kernel extensions! (I'll leave higher-level cop-outs, like manually launching startup items, as an exercise to the reader.)
As with any process requiring root privileges, there's plenty of room to hose your system to the point of needing a forced reboot (or maybe worse if you're creative), so use discretion, keep backups, and don't blame me. If you know what you're doing, though, this can save you a lot of reboots.
By way of example, I'll use my recent upgrade from v2.1 to v3.1 of the MS IntelliPoint driver:
% su
% kextunload MicrosoftMouse.kext/
% kextload MicrosoftMouse.kext/
Mac OS X Hints
http://hints.macworld.com/article.php?story=20021025065101763