Is it possible to install the Application Tier on the domain controller itself? If yes, do I still create the user tfsservice and tfcsetup or can i use the administrator directly?
What are the cons of doing this(vsts + pdc) in one server.
Yes, both App Tier and Data Tier can be installed on the domain controller.
On the dual-server topology, you should use domain accounts as the TFSSETUP, TFSSERVICE, and TFSREPORTS accounts. The latter two accounts don't need to be an admin on either AT or DT machine.
