Totally possible. The trick is to edit the .dpr to create main form when you want to run as an application and the service form when you want to run as a service. Like this:
if SvComFindCommand('config') then begin
//When run with the /config switch, display the configuration dialog.
Forms.Application.Initialize;
Forms.Application.CreateForm(TfrmConfig, frmConfig);
Forms.Application.Run;
end
else begin
SvCom_NTService.Application.Initialize;
SvCom_NTService.Application.CreateForm(TscmServiceSvc, scmServiceSvc);
SvCom_NTService.Application.Run;
end;
The code above uses SvCom to run the service but exactly the same effect could be achieved using the standard TService.
I wrote an article about that for The Delphi Magazine many years ago. You can read it here: Many Faces Of An Application.