Yes, some people do that. There is a forum for it here:
http://www.e-cigarette-forum.com/forum/liquid-extraction-tobacco/
Basically, you boil the tobacco in VG very briefly, then let it stand for 24 -48 hours. Then filter it two or three times to ensure all particulates are removed, it may need some dilution to pass through a filter. You get a thick black goop that has to be diluted at least 100% with VG and a little alcohol or whatever. We call this TE or tobacco extract / essence. It can be added to your normal e-liquid. VG is a better solvent than PG for this. Don't use water.
As for any kind of e-liquid tobacco recipe, it's hard to exactly replicate the precise taste/effect of tobacco smoke because you are inhaling a cool mist not hot smoke, but depending on what kind of tobacco you used, and your taste, the results can be good. As always: different from a cigarette, but in many ways better.
Another reason to do this is to substitute for Snus if you don't have any. People who still crave a cigarette even on a high nicotine strength e-liquid obviously need something else that's in the tobacco as well as nicotine, and many use Snus to obtain this (small oral tobacco pouches specially made to a safe recipe). There are all sorts of arguments about exactly what this might be, but for me whatever it is carries across into the TE and does the job. I use it when a cig craving takes hold, and it fixes the problem. No Snus needed - the e-cig does the job 100%.
Note that very little nicotine will be obtained by this method, probably 2mg or less (2mg/ml or 0.2%), as against for example a medium strength e-liquid level of 18mg (18mg/ml or 1.8%) - it's purely for flavor and that extra
je ne sais quoi.
