This should work if you read the file yourself and pass the string input to the library.
So the answer to "can we use" is - yes, you can. If you expect the library to read file based on a provided filesystem path or URL, then the answer is - no, the library won't interact with your filesystem or URL location.
Alternatively, you can use a DOM parser that is capable of stream parsing. This actually can save some resources. You can then pass the DOM to Turndown (instead of string).
This should work if you read the file yourself and pass the string input to the library.
So the answer to "can we use" is - yes, you can. If you expect the library to read file based on a provided filesystem path or URL, then the answer is - no, the library won't interact with your filesystem or URL location.