Is this possible in .NET?

Yup. You can make something exactly like that just using a Windows Form. Just drag a toolstrip onto it, size it how you want, and wa la! If you want cool looking graphics, then you will have to look into skinning a windows form.

What I meant is the ENTIRE toolbar will be a Windows Form. Example:

http://img153.imageshack.us/img153/7591/untitledyj6.jpg

You can access events in one form from another. Example:

Form1 is the main form.
Form2 is your toolbar form.

// IN FORM 2
UserClicks Edit button -> Form1.EditFunction();

// In FORM1
EditFunction() fires.

I would get more in depth, but this goes into a whole other topic discussion, and I have to leave for the night.

Hopefully someone else can pick up where I left off.

Good luck pal.

Make sure that the toolstrip forms border is not set to FixedDialog and that you are using the Show() method to call it and not ShowDialog();