Absolutely, though in this case it would be the most obvious translation, since it was a frisian settlement and "Rung" and "Holt" are both frisian words in use. It is possible that Rung here could mean stanchion/post (so for wood that makes strong posts), but unlikely so close to the sea, is it not?
I get what you mean, though. Here is a village called Großenwiehe, easy to be translated as "Great Consecration", and that was the commonly accepted meaning. Only much later it became apparent that "-wiehe" probably came from wighæ, so "Great Fortification". And in fact the old fortifications are still visible today.
Not far away, but partially preserved by the mudflat, lies Rungholt. A city of ~1000-1500 (some sources say 3000) inhabitants that was drowned in the Grote Mandrenke (1362 AD). That's a very big city in that time. In my childhood we were told, while wandering the tidal flat, that we should listen closely if we could hear the church bells under the mud. Only in 2023 the whereabouts of the sunken city were definitely confirmed and mapped. "Rungholt" probably means "wrong/low wood".