You mean the PC engine CPU flashing it's own Flash EPROM? Well but this requires some bootloader residing in an unerasable segment of the Flash.
Yes, either in the flash, or in a separate ROM, or inside an FPGA.
However even the FTDI USB to FIFO solution requires some isolation logic to avoid conflicts beteen the FTDI output and the databus of the CPU.
Yes, you'd probably just make it a memory-mapped peripheral (probably somewhere in bank $FF).
And the Turbo Everdrive has a generous FPGA with plenty of logic for glue purposes.
Yes, that's the kind of setup that you'd probably need if you want the PCE's CPU to do the flashing.
Alternatively, if you still want to do the flashing from USB while the card is inserted in PCE, then you're going to have to isolate the entire HuCard address and data buses from your flashing, and you're going to need a certain a amount of intelligence on the board itself, possibly in either an FPGA or a CPLD.
You
might be able to accomplish the isolation just by asserting the HuCard RESET signal during the entire flashing process ... but you
might need to use actual buffers.
I really don't know ... these are experiments for you to try as you design your hardware.
Have you looked at the Cypress PSoC 5?
Have fun!