How to create new domain w/ Hyper-V 2012 hosting the DC server?

I have a small business client that's being spun off to run independently from a larger organization. They want to start from scratch and will be on their own premises. I'll be setting up a new 2012 Domain Controller/File Server and a second 2012 server to host an industry application. The plan is to install Hyper-V core on the bare metal, and then the new DC, creating a new domain, and finally the second app server.

The problem is configuring the Hyper-V core on bare metal. I can't join it to the domain as the domain doesn't exist until I install the new DC. Am I better off installing 2012 standard w/ both Hyper-V and DC roles and then just running the second server as a VM or is there a preferred way to handle this chicken/egg situation?

The preferred way to handle this situation is not to create a dependency like the one you're describing. So, either have your entire domain (including the DC) virtualized as Hyper-V guests, or to build a DC on a separate, bare metal server. Additionally, you always want to have more than one DC, so your proposed setup is a bad idea for that reason as well.

I prefer to keep at least one DC on bare metal, and given how lightweight a DC is, I tend to use an older and/or cheaper server for that role, so I would buy a second server on the cheap, use it to create my domain, then use the server you have as a Hyper-V host, and create a virtualized DC and a virtualized app server.