1. No, you don't *have* to have separate applications.  You could do the
update in a thread of the main application.  You could use multiple
applications.  It's entirely up to you.  You might use a point-to-point
message queue for communication (if you need to pass data from one to the
other), or you might simply set a named event object (OS-level object), and
check that in the other application, or you might broadcast a window message
which the other application would listen for.  If all you need to do is
signal, hey, there's a new version of the database; close the one you have,
copy this one over the top and start using it, I'd use a named event.

2. No, of course you can't access the objects in another program from a
second one, whether it's a service or not.  That doesn't mean that you can't
communicate with another program.  You can't simply call xyz.Invoke( ... ),
though.

3. Events like what?  Sorry, but this question seems to come from no where.
As mentioned above, you can use an "event", in the operating system sense,
to trigger some action from an interested application.  The other
application will probably have to have a thread to listen for the event and
then take action to notify the main UI thread that it's time to do
something.  Or do you mean something else by "event"?

Paul T.