I was talking to one of my friends, and at one point they said
ドイツ雪ってるはず
Am I right in thinking that 雪ってる means snowing?
I'm aware this is clearly not formal Japanese at the very least, but I've also never seen it used before at all. Can 雪(る) even be used as a verb?
As you guessed, it surely is "It must be snowing in Germany", said in a very slangy way.
People usually don't use 雪る, but coining such verbs (even from traditional Japanese words) is not too uncommon among native speakers. You know, English speakers do it pretty often in casual settings, too. And in this case, there's a verb 曇【くも】る (雲 + る, "cloudy") which looks similar, so it should have been easy for them to come up with 雪る.
Of course, don't try to use it yourself until you reach the native speaker's level, or people would just think you made a grammatical mistake.
If the speaker really said 雪ってる, then yes, I agree with you and naruto that it should be a made-up word meaning “snowing.” But I have another explanation of what happened, which I think is much more likely given your description.
Just from your description, it is entirely possible that the speaker said 雪[降]{ふ}ってるはず and you heard it as 雪ってるはず. For example, when I tried pronouncing 雪降ってるはず, I found myself devoicing the vowel in the ふ sound. Some non-native speakers have trouble recognizing devoiced vowels. Moreover, this particular case of devoiced vowel is probably more difficult to recognize than typical devoiced vowels because it is followed by っ and therefore the lack of vowel sound can be mistakenly attributed to the following っ.
