According to dictionary, one definition for a intransitive use of the phrase "pick up" is to improve. So, could I write these?

  1. The situation finally picked up.
  2. His health finally picked up.

The first one is a bit tricky. It's hard to tell what about the situation is picking up; pick up can also mean improve in speed or grow stronger:

The winds have really picked up out there.

In this case, you're probably better off just sticking to "improved."

As for your second sentence, it's perfectly acceptable, though I do think you're more likely to see "improved" when talking about health.

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