Yes this is how we are implementing it:
Create a BO "ApplicationToBecomeAUser" with an attribute "ApplicationStatus" which is defaulted to "Application Made"
Rule on New: notify the administrator about the new application. Include the URL to the form in the e-mail. (The manual has a set of URL "commands" you can use for this.)
Rule on Modify: If ApplicationStatus is "Approved" Create a new User and copy all the details from the ApplicationToBecomeAUser including preferred login name and password. You may need to add some code to ensure the loginname is unique.
If "Rejected" notify applicant.
On the User BO have a rule on New: Notify the User with an e-mail. Include the (new) login name in the mail.
Both BO's should be "intelligent".
The administrator will receive a notification about the new application and then click through on the URL to change the Application Status to Approved or Rejected. The rule on the User BO will now notify the user.