Можно ли использовать один и тот же экземпляр книги xlwt в разных функциях?

...да

import xlwt
class MyWorkbook:
    ''' allow access to a workbooks sheets'''
    def __init__(self,*args,**kwargs):
        self.wb = xlwt.Workbook(*args,**kwargs)
        self.sheets = []
    def add_sheet(self,sheet_name):
        self.sheets.append(self.wb.add_sheet(sheet_name))
        return self.sheets[-1]
    def GetSheetByIndex(self,n):
        return self.sheets[n]
    def save(self,fname_or_stream):
        return self.wb.save(fname_or_stream)

def CreateWB():
    ''' return a MyWorkbook instance with 1 sheet'''
    m= MyWorkbook()
    m.add_sheet("first_sheet")
    return m
def ModifySheet0(mwb):
    '''uses instance of MyWorkbook and modifies sheet0'''
    s = mwb.GetSheetByIndex(0)
    s.write(0,0,"Hello World!")
def DoItAll()
    '''passing around MyWorkbook'''
    wb = CreateWB()
    ModifySheet0(wb)
    wb.save("somefile.xls")