I could walk, but it's way too hot.

Literal

Walk-even good [explanatory-んだ] [but-が], too-hot.

~てもいい = 'it's OK to X,' 'may X.' Here as concessive: 'walking is an option, but...' The trailing が closes the first clause as a soft 'however.' ~すぎる (compound verb 'to X too much') attaches to the stem of the い-adjective 暑い → 暑すぎる ('too hot').