You should make it a daemon unless it's something that requires interaction on the console. If it is, then I'd suggest you rethink your concept of console. Get a board with two serial interfaces (assuming the console is serial now) and have it access the non-console serial port. Trying to do it any other way is going to be an exercise in frustration.

That said, you don't really need a customized kernel to make it happen. The default behavior of the Linux kernel is to look for a program called /sbin/init and run that. If that fails, it falls back to /sbin/sh and runs that, and if that fails, it panics (or maybe just stops, but you've not got a viable OS at that point). If you want the OS to do one thing only, you can replace /sbin/init with any program you want to write. You just need to make sure that it doesn't exit, because when it does, that's the end of the OS. (Actually, it might try to start it again -- I forget -- but it's bad form anyway. Then again, we're already talking about bad form, so who cares, right?)