Yes, just create a directory in your solution like lib/, and then add your dll to that directory in the filesystem and add it in the project (Add->Existing Item->etc). Then add the reference based on your project.
I have done this several times under svn and under cvs.
Probably, the easiest way to achieve this is to simply add the reference to the assembly and then (manually) patch the textual representation of the reference in the corresponding Visual Studio project file (extension .csproj) such that it becomes relative.
I've done this plenty of times in VS 2005 without any problems.
To expand upon Pavel Minaev's original comment - The GUI for Visual Studio supports relative references with the assumption that your .sln is the root of the relative reference. So if you have a solution C:\myProj\myProj.sln, any references you add in subfolders of C:\myProj\ are automatically added as relative references.
To add a relative reference in a separate directory, such as C:/myReferences/myDLL.dll, do the following:
Add the reference in Visual Studio GUI by right-clicking the project in Solution Explorer and selecting Add Reference...
Find the *.csproj where this reference exist and open it in a text editor
As mentioned before, you can manually edit your project's .csproj file in order to apply it manually.
I also noticed that Visual Studio 2013 attempts to apply a relative path to the reference hintpath, probably because of an attempt to make the project file more portable.
I might be off here, but it seems that the answer is quite obvious: Look at reference paths in the project properties.
In our setup I added our common repository folder, to the ref path GUI window, like so
That way I can copy my dlls (ready for publish) to this folder and every developer now gets the updated DLL every time it builds from this folder.
If the dll is found in the Solution, the builder should prioritize the local version over the published team version.