Yes they can. This attack does not have to be carried done through a chrome extension. I simply chose that because it is the easiest to show off. This can be hidden inside of a malicious npm module or injected into a website that has poor input sanitization.
The most important aspect of this attack is that it is carried out through css. It is possible to block remote javascript code from an extension, in fact, if one wanted to inject javascript into https://instagram.com (my example on github), they would fail.
