Running application in kernel mode as device driver!
 

It might sound stupid, but, hey, I'm newbie!

Is it possible? Let me explain a bit. I've a full blown application using all operating system features such as threading, synchronization etc. Can I package it as device driver? Would that improve performance? Not sure if there are any memory/code size limitations in device drivers or whether all kernel facilities are available.

You shouldn't in linux make a large application as kernel module or kernel app. Threads, synchronization are good for applications. You need not fear for application being big.