alt Hacker NewsIANAL. My understanding is that you can do consular processing even if you are in the US, it's just that you need to leave to do the interview (and things like biometrics) and get the actual visa.
Now I'm not sure if you are allowed to re-enter after your interview before your case is decided/you get the visa but I would imagine so (if have valid visa), you would just need to exit again to get the visa later.
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Also not a lawyer.
I believe the issue with what you're describing is that if you're on a temporary visa, like a student visa, applying for a green card shows intent of immigration so you cannot return to the US on a student visa.
If you have an H-1B already you may be able to do what you're describing. If you're a recent grad in the US this basically locks you out of trying to get a green card until you've already secured an H-1B.
If that’s true, things may be slightly better, but I’m also reading this move will take away substantial funding from uscis since it is funded purely based on fees collected with immigration applications. Processing times are already pretty large in a lot of countries. So even with the flexibility, you carry a substantial risk.