Steve,
>For the "go-live" phase (not development), is it best to make the VFP app out-of-process or in-process?
If you will be going through a web server for any of this, which it sounds like you will, be sure to read the white papers at West Wind, especially this one about using the internet as your network via HTTP:
http://www.west-wind.com/presentations/wchttp.htmThis is the same concept that you will see just over the horizon with MS's Web Services.
You can run the VFP front-end and hit the Web Connection server for result sets, which can be sent back and forth in several formats using WC's built-in classes. You can also hit WC through a browser interface, which can call your same customized methods with a different parameter to indicate you want HTML contructed instead.
If you go this route, you will be running one or more instances of an EXE out-of-process server through WC's foxisapi-style interface.
Read all the papers at West Wind, download the fully-functional demo of WC, and enjoy! You'll end up with lots of possibilities for accomplishing your task.