Muscle wasting possible due to ulnar nerve compression?

Yes. Depending on where nerve is compressed, muscles innervated may be affected. Commonly, muscle in first webspace, between thumb and index, become atrophied. Muscles between metacarpals, or interossei, can atrophy. Result is hand weakness with atrophy.
Yes. If the compression is severe enough to stop nerve conduction, atrophy of the affected muscles is likely.

Related Questions

Does muscle wasting start rapidly after nerve compression?

Not first symptom. In the example of carpal tunnel which is compression of the median nerve in the carpal tunnel, the first symptoms are usually sensory with numbness, tingling and paraesthesias. As the compression you will start to get motor or muscle changes typically affecting the thenar muscles whereby you may start to drop more small objects and develop atriophy. Read more...