Can you use pine needles as grass seed cover?

Not really, no. Pine needles are very acidic, and as such may kill other plants. Look underneath most spruce and pine trees and you'll notice that grass doesn't grow well or at all. That's because of the acids in the needles.

Answer #2:

In Organic Gardening magazine, Dr. Abigail Maynard disspelled the myth that pine needles adversely affect the pH of soil. This article appeared sometime between 2000-2003. There are lots of other references on the web as well if you do a search for it.

Pine needles make great mulch for flower and vegetable gardens.