I remember hearing that the PlayStation emulator bleem! did something like this for threading/timing purposes, essentially running its own microkernel and hooki

I remember hearing that the PlayStation emulator bleem! did something like this for threading/timing purposes, essentially running its own microkernel and hooking interrupts to bypass the Windows scheduler. However, this supposedly worked by basically exploiting a bug in the way Windows 9x set up task switching and memory protection, and so didn't work on any NT-based Windows (or Wine, for that matter). Also, it obviously didn't try to hide the main program that managed the window and other I/O operations. Malware often has something akin to this as a goal, but as far as I know it usually works by hiding itself from the user rather than the kernel.