Yes this is possible. There are some minor limitations if the application and service are running on the same system, but your scenario should not suffer from that.
From How to: Impersonate a Client on a Service:
When the client and service are running on the same computer and the
client is running under a system account (that is, Local System or
Network Service), the client cannot be impersonated when a secure
session is established with stateful Security Context tokens. A
WinForms or console application typically is run under the currently
logged in account, so that account can be impersonated by default.
However, when the client is an ASP.NET page and that page is hosted in
IIS 6.0 or IIS 7.0, then the client does run under the Network Service
account by default. All of the system-provided bindings that support
secure sessions use a stateless Security Context token by default.
However, if the client is an ASP.NET page and secure sessions with
stateful Security Context tokens are used, the client cannot be
impersonated.
如果您的服务是窗口服务,则没有具体限制。