Is it possible to install a ROM on /recovery instead of /system?
TWRP normally installs to recovery; kernel for the OS normally installs to boot; /system is another thing entirely where the majority of the files of the OS goes.

Doesn't change the conclusion for what you want to achieve though - yes, you can swap boot and recovery so it boots to recovery by default and boots to the OS when choosing "reboot to recovery" or using the key combo. At heart the two booting processes are both simply booting a kernel image. Note that this doesn't touch /system.