> Is there a way to setup a regular local Firebird server to which the application can connect directly (via DLL), so that other connections are possible as well?
> Or can the embedded server be configured to act as relay to a regular Firebird DB?

The embedded lib does that transparently. The difference between fembed
and fbclient is that the first does redirect the "local connect" to the
embedded engine.

To have the application access an server on local machine it might be
sufficient to replace the embedded DLL with the smaller client DLL. This
sould make the application open database via server running on local
machine.

It does not help accessing an server running on an different machine (to
have the application running on an second machine).

One feature might help to do that: When running on an network share
firebird does try to redirect database access to an server running on
the remote host. With luck this might solve your problem.

In any case do try out everything with an copy of your application&data
only.

You should consider if running on an second machine is allowed by the
license of your proprietary application.

Elmar